Govt raises Rs772bn through T-bills’ auction; yields fall by 9-15 bps

KARACHI: The government raised Rs 772 billion from the auction of Market Treasury Bills on Tuesday, exceeding the Rs650 billion target, the auction result released by the State Bank of Pakistan showed.

“In today’s T-bill auction, huge participation of Rs3,235 billion was seen, with the government raising Rs772 billion as against the target of Rs650 billion and maturity of Rs818 billion,” said Topline Securities in a brief note.

The cut-off yield fell across all tenors, ranging from 9-15 basis points (bps). The one-month T-bill decreased by 15 bps to 11.09 per cent. The three-month paper yield also declined by 9bps to 11.14 per cent. The yield on the six-month T-bill was down 9bps at 11.18 per cent. The yield on the 12-month paper fell by 15bps to 11.19 per cent.

In the floating-rate Pakistan Investment Bonds’ auction, the government raised Rs187 billion (competitive and non-competitive) against a participation of Rs700 billion and a target of Rs200 billion.

This month, the SBP lowered its benchmark interest rate by 100bps to 11 per cent, marking the continuation of a series of rate cuts that reduced the rate from a record high of 22 percent after a brief hold in March. The policy rate has fallen by 11 percentage points since June 2024.

Markets and analysts are waiting to see what the SBP will decide on interest rates at its June 16 meeting. The inflation is predicted to be 3.0 per cent year-on-year (YoY) and 0.61 per cent month-on-month (MoM) in May.

Headline inflation eased to 0.3 per cent in April, down from 0.7 per cent in the previous month. Additionally, core inflation, which had remained around 9.0 per cent for several months, slowed to 8.0 per cent in April. This decline is largely due to a favourable base effect in the context of moderate demand conditions.