The federal government successfully raised Rs1.22 trillion through recent auctions of Treasury Bills (T-bills) and Pakistan Investment Bonds (PIBs), surpassing its targets despite a significant bid shortfall in the PIB auction, according to the details shared by the State Bank of Pakistan (SBP).
The government received bids totaling Rs1,730 billion for T-bills and Rs1,592 billion for PIBs, indicating that investors are willing to invest over Rs3.3 trillion in these low-risk government securities. The T-bill auction raised Rs965 billion, surpassing its target of Rs850 billion, with the maturing amount standing at Rs821 billion.
However, the PIB auction fell short of its target, with the government raising only Rs261 billion, against a target of Rs400 billion, despite receiving Rs1.59 trillion in bids. This disparity highlights a trend of investor preference for short-term, risk-free instruments over longer-term securities, signaling potential concerns about future economic stability and long-term investment growth.
The cut-off yields for T-bills showed minimal change across most tenors, with the one-month T-bill yield dropping by 6 basis points to 12.32 percent. The yields on three-month, six-month, and 12-month papers remained steady at 12.01 percent, 11.99 percent, and 12.01 percent, respectively.
This heavy demand for government securities further underscores a broader issue in Pakistan’s banking sector: a decline in private sector lending. As advances to the private sector continue to fall, the growing investment in government papers raises concerns about the lack of funds available for private sector growth, which is vital for economic expansion.
