SBP Revises Mechanism for Buyback of Govt Securities

The State Bank of Pakistan (SBP) revised its mechanism for the buyback of government securities, saying that it will conduct auctions for the buyback of market Treasury bills (T-bills) and Pakistan Investment Bonds (PIBs), including Zero Coupon, Fixed, and Floater instruments, on behalf of the Government of Pakistan. Previously, a buyback auction was conducted for short-term papers, however, now to further reduce the national debt burden, the government has decided to extend its buyback operations to include long-term bonds. This strategic move aims to enhance debt sustainability and fiscal management. The federal government conducted the first buyback auction of MTBs on September 30, 2024. During this auction, bids amounting to Rs. 563 billion were received, out of which Rs. 351 billion were accepted for T-bills set to mature in December 2024. This initiative leveraged liquidity from the SBP profit transfer, reinforcing the government’s commitment to proactive debt management. SBP will announce the details, such as security, target amount, auction schedule, etc., and auction results for the buyback of Government Securities on SBP pages at Refinitiv and Bloomberg, and on the SBP website. According to the circular, all primary dealers can submit competitive bids in the auctions. Non-competitive bids can also be submitted as per existing instructions.