The State Bank of Pakistan (SBP) exceeded its target in the latest auction of Market Treasury Bills (MTBs), raising Rs361 billion against an initial goal of Rs300 billion.
This auction covered 3, 6, and 12-month maturities, with cut-off yields of 21.6998%, 20.3952%, and 20.3290%, respectively. Notably, there was a significant increase of 126 basis points for the 3-month bills and a smaller increase of 25 basis points for the 12-month bills, while the 6-month yield remained stable.
This move aligns with the SBP’s ongoing strategy to maintain high borrowing costs, keeping the interest rate at 22% to combat inflation. Despite these high rates, the auction attracted substantial interest, with bids totaling Rs1.293 trillion. Of these, the SBP accepted bids for Rs310.16 billion for 3 months, Rs0.62 billion for 6 months, and Rs50 billion for 12 months, adding Rs34 billion from non-competitive bids to reach the total.
The bid-to-cover ratio of 3.58, down from 20.25 in the previous auction, indicates selective acceptance of bids by the SBP. This strategic approach helps manage the cost of government borrowing while addressing inflation. This auction’s results reflect the SBP’s careful navigation of Pakistan’s financial landscape, showing a significant demand for government securities in a high-yield environment.
