The government raised Rs492 billion through an auction of fixed-rate Pakistan Investment Bonds (PIBs) on Wednesday, exceeding its Rs450 billion target, as yields declined sharply across all accepted maturities amid strong investor demand. Total participation in the auction reached Rs2.06 trillion, according to results released by the State Bank of Pakistan.
Cut-off yields fell by 60–70 basis points across most tenors. The two-year PIB yield declined by 59 basis points to 10.19%, while the three-year yield dropped by 70 basis points to 10.14 percent. The five-year bond cleared at 10.525% after a 67-basis-point decline, and the 10-year yield fell by the same margin to 11%. The government rejected bids for the 15-year tenor.
Market participants said the auction reflected expectations of further monetary easing. Demand was concentrated in the three- to 10-year segment, where acceptances exceeded targets and yields cleared at or below prevailing benchmarks, indicating confidence in a supportive liquidity environment. The two-year tenor remained closely aligned with policy expectations, while the absence of acceptances in longer maturities suggested caution on extending duration.
The auction followed a 50-basis-point cut in the benchmark interest rate by the central bank in December, which brought the policy rate to 10.5% after a four-meeting pause. The next monetary policy decision is scheduled for January 26.
Inflation data has supported the easing outlook, with consumer price inflation slowing to 5.6% year-on-year in December from 6.1% in November. The central bank has noted that average inflation has remained within its 5–7% target range during the first five months of the fiscal year, although core inflation remains relatively firm and headline inflation could rise temporarily later in the year due to base effects.
