The State Bank of Pakistan (SBP) conducted a Treasury Bill (T-Bill) auction on Wednesday, raising Rs616.06 billion against a target of Rs800 billion. The auction saw a massive participation of Rs2.49 trillion, with the central bank accepting approximately 26.8% of the total bids received.
Cut-off yields across all tenors declined notably, with the 3-month T-bill yield falling by 70 basis points (bps) to 12.9974%. The SBP accepted Rs121.09 billion from a total of Rs632.32 billion in bids for this tenor.
The 6-month T-bill yield dropped by 61bps to 12.8948%, with Rs54 billion accepted from Rs531.15 billion in bids.
The 12-month T-bill saw the sharpest decline, with yields decreasing by 85bps to 12.3500%, and Rs305 billion accepted from Rs1.13 trillion in bids.
Additionally, the SBP raised Rs135.97 billion through non-competitive bidding, bringing the total amount accepted to Rs616.06 billion. The bid-to-cover ratio, which reflects the amount of bids received versus the amount sold, increased to 3.73 from 3.04 in the previous auction, indicating high demand despite a lower acceptance rate.
This auction contrasts with the previous one held on November 13, 2024, where the SBP raised Rs820 billion against a target of Rs400 billion. Yields in that auction were significantly higher, with cut-offs of 13.7% for the 3-month, 13.4999% for the 6-month, and 13.1999% for the 12-month T-bills.
SBP also conducted an auction for floating rate Pakistan Investment Bonds on Wednesday in which it sold Rs643.57 billion for 5 and 10-year semiannual bonds against a target of Rs300bn. The cut-off price stood at 96.6877 for the 5-year bond and 92.5462 for the 10-year bond, while bids were rejected for 2-year bonds.
The decline in yields is seen as a positive sign, reflecting improved liquidity conditions and a favourably expansive interest rate outlook. Analysts believe that this development could support the government’s efforts in fiscal management and contribute to broader economic stability.
