Govt raises Rs388bln through MTBs

KARACHI: The government has raised Rs388 billion through an auction of Market Treasury Bills, with the cut-off yields falling on short and long tenors, State Bank of Pakistan data showed on Wednesday.

The lower yields reflect the market expectations the central bank will slash interest rates in times to come if inflation shows a declining trajectory.

The raised amount was higher than the auction target of Rs300 billion. The cut-off yield for three-month T-bills edged lower by 3 basis points to 13.39 percent at which the government borrowed Rs131 billion.

However, through the six-month bonds, the government raised Rs2 billion at the cut-off yield of 13.34 percent, up 4 basis points from previous auction held on February 12.

An amount of Rs255 billion was attracted for 12-month paper at a yield of 13.33 percent, down 19 basis points from previous auction. Mohammed Sohail, the CEO at Topline Securities, said, “One-year aggressive participation shows bankers feel rates [policy rate] may come down after few months”.

The next monetary policy meeting is scheduled for March.

Swiss financial services firm Credit Suisse in its latest report expected that State Bank of Pakistan (SBP) would slash interest rates in the range of 100 to 200 basis points in the second half of the this year as the rupee stepped back on to a stability path.

“We believe the SBP will most likely await firm signs of disinflation before doing so," it said. An analyst at Alfalah Securities said the sharp drop in tomato, wheat, potato, and LPG (liquefied petroleum gas) prices was expected to bring down National CPI (consumer price index) (NCPI) inflation to 12.7 percent in February from 14.6 percent in previous month.