MTBs yields drop

KARACHI: Yields on Pakistan’s market treasury bills (MTBs) slightly fell at an auction on Wednesday.
The State Bank of Pakistan (SBP) sold Rs76.103 billion of three-, six- and 12-month government papers. It sold Rs55 billion of benchmark six-month paper at a cut-off yield of 7.9436 percent, fell from 7.9869 percent from the previous auction held on March 18. The cut-off yield on the one-year market treasury bill was unchanged at 7.8382 percent and three-month papers declined to 7.9648 percent as against 8.1902 percent. The central bank sold Rs9.275 billion of the one-year and Rs11.538 billion of the three-month papers. It received total bids worth Rs79.225 billion.
The State Bank also issued an auction target calendar, planning to raise Rs1.25 trillion from the sale of market treasury bills and Pakistan Investment Bonds during April to June 2015.
Dealers said yield curve at short-term maturities coupled with expected correction in inflation and falling global commodity prices indicate the central bank is likely to have space to cut discount rate by 50 basis points in the coming monetary policy review due in May.