SBP to sell debts worth Rs2.85trln in Dec-Feb

KARACHI: The State Bank of Pakistan (SBP) will hold auctions of various maturities of the market treasury bills and Pakistan Investment Bonds (PIBs) worth Rs2.85 trillion in next three months of the current fiscal year of 2019/20, the bank said on Friday.

The auctions will be conducted during December 2019 to February 2020 to finance the budget deficit of current fiscal year.

The central bank will auction Rs2.40 trillion of three-, six- and 12-months debts, while it also plans to offer Rs300 billion worth of three-, five-, 10-, and 20-year fixed rate PIBs. Moreover, the SBP would auction Rs150 billion of 10-year floating rate PIBs.

Global investors have piled over $1 billion into treasury bills this fiscal year, more than what they invested in the debt in the past four years, according to central-bank data. The country received $1.097 billion investment in T-bills from July 1 to November 19.

Interest in the nation’s bonds has surged this year as the State Bank of Pakistan more than doubled its policy rate to 13.25 percent -- the highest in Asia -- over 10 meetings to help stabilise the economy.

The government needs liquidity to meet a large chunk of its spending requirements through commercial banks’ financing.

Reuters data showed that emerging market policymakers have slashed interest rates this fiscal year, taking their lead from major central banks such as the U.S. Federal Reserve, joining in efforts to shore up their economies.

Analysts said the government had stopped borrowing from the central bank under the obligation to create a fiscal discipline after entering into the International Monetary Fund (IMF) bailout programme.

The yields on MTBs and PIBs rose across the board in the previous auctions. Analysts expect yields on both the benchmark bonds to rise further on expectations of a hike in inflation over the medium term.

The SBP in its monetary policy announcement on November 22 kept the policy rate unchanged for next two months in view of higher inflation.

Interest rate, along with government efforts to improve public finances with support from the IMF, has boosted the allure of the notes as the world’s pool of negative-yielding debt deepened.

Foreign flows in November have all gone into Treasury bills -- which have a maximum holding period of 1 year -- with 55 percent of them coming from the UK and 44 percent from the US, the central bank data showed.