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December 3, 2020

Govt raises Rs382.3bln via MTBs

Business

December 3, 2020

KARACHI: The government on Wednesday raised Rs382.3 billion through the auction of Market Treasury Bills, slightly higher than the pre-auction target of Rs350 billion.

State Bank of Pakistan (SBP) data showed the three-month treasury bills cut-off yield eased to 7.1408 percent from 7.1525 percent in the previous auction on November 18, 2020. The SBP sold Rs322.3 billion worth of the shortest tenor paper.

According to central bank it sold Rs50 billion worth of six-month papers, while the cut-off yield stood at 7.1849 percent, compared with 7.1998 percent in the last auction.

The yield on 12-month treasury bills rose to 7.2989 percent from 7.2498 percent, whereas the government raised Rs10 billion through the auction of this paper.

Analysts said investment via short tenor T-bills remained higher. The expectations that interest rates might see an upward revision in the medium-term shifted investor preference to shortest tenor paper over other two, they added.

“Yields are almost the same. Majority of the investors are investing in 3-month paper as they believe rates may rise in the medium-term,” said Mohammed Sohail, CEO at Topline Securities.

The SBP kept the policy rate unchanged at 7 percent for the second time in the last monetary policy announced last month. Many analysts expect the policy rate to remain flat until the first quarter of 2021.

Moreover, National Consumer Price Index inflation eased to 8.3 percent in November from 8.9 percent in October, likely strengthening the case for a dovish monetary stance in the short-term.