The federal government through the State Bank of Pakistan (SBP) successfully raised Rs1.67 trillion in its latest Pakistan Investment Bonds (PIBs) and Market Treasury Bills (MTBs) auctions, conducted on March 26, 2025, with settlement set for April 3, 2025.
The auctions saw considerable participation, reflecting the banking sector’s continued appetite for government-backed securities.
In the PIB auction, the SBP received a total of Rs1,132.5 billion in bids, out of which Rs980.505 billion was accepted. The auction was conducted in two segments: competitive bids and non-competitive bids. Of the total accepted amount, Rs972 billion was from competitive bids, and Rs8.505 billion came from non-competitive bids.
The 2-year PIBs, which generally attract lower yields, did not see any demand during the auction. However, the 5-year PIBs were accepted at a cut-off price of 96.8291, with Rs16.903 billion accepted for this tenor.
The 10-year PIBs, which are typically favored by long-term investors, received the largest portion of the accepted bids, amounting to Rs963.602 billion. These long-term bonds were accepted at a cut-off price of 92.6071, indicating strong investor confidence despite uncertain macroeconomic conditions.
The MTB auction, on the other hand, was held to generate shorter-term funds. SBP received total bids of Rs1,084.95 billion and accepted Rs689.768 billion, with bids spread across various tenors. The 1-month MTBs attracted the highest demand, with a cut-off yield of 12.3898%. The 3-month MTBs came in next with a yield of 12.0100%, while 6-month MTBs received a yield of 11.9999%. The 12-month MTBs had a slightly lower cut-off yield of 12.2483%.
The weighted average yields for the different tenors were slightly adjusted based on the demand dynamics, ranging from 11.8256% to 12.2483%. The demand for short-term government securities reflects the market’s cautious stance, while the higher yields on longer-tenor PIBs underscore investor confidence in the stability of government-backed securities.
This latest round of auctions highlights a continued preference for government securities in a climate of economic uncertainty, as investors seek the relative safety of Treasury Bills and Pakistan Investment Bonds amid global and domestic challenges.
