SBP raises Rs320 billion through T-bills auction

KARACHI: The State Bank of Pakistan (SBP) has sold Rs319.93 billion worth of treasury bills in an auction held on Wednesday against the target of Rs350 billion set for the auction.

The central bank received bids of around Rs569.6 billion on face value of Rs591.21 billion. The SBP accepted bids of three-, six- and 12-month maturities at the face value of Rs329.95 billion.  The cutoff yield in the latest auction increased in all the three maturities. The cutoff yield for three-month Market Treasury Bills (MTBs) increased to 6.2591 percent from 6.1697 percent; six-month increased to 6.2665 percent from 6.1812 percent and for 12-month the yield increased to 6.2758 percent from 6.2306 percent.

The highest amount of Rs169.366 billion has been accepted against the three-month maturity at the face value of Rs171.8 billion. The SBP accepted bids in other two maturities included Rs56.73 billion for six-month and Rs93.84 billion for 125-month T-bills.

The federal government borrows from commercial banks for its budgetary needs. The borrowing pattern is now focused on commercial banks after restrictions on the government to borrow from the central bank.

In the latest auction calendar, the government has planned to borrow through the sale of treasury papers during the next three months, of which 86 percent amount would be taken for retirement of matured amount and the remaining for the budgetary and project financing.

The targeted amount of government papers, which would be sold through auction during February to April, 2016. The sum of Rs1,775 to be raised through sale of Market Treasury Bills (MTBs), Pakistan Investment Bonds (PIBs) and Government of Pakistan Ijara Sukuk, the central bank said. The maturing amount during the period is around Rs1534 billion. The additional requirement for project finance is targeted at Rs240 billion.  The bulk amount of Rs1425 billion to be raised through auction of treasury bills. The entire amount is projected to be used for repayment of matured amount of Rs1428 billion during the period.