Pakistan govt buys back another PKR 475 billion worth of T-b​ills

The government of Pakistan has made another buyback of treasury bills (T-bills) worth PKR 475 billion ($1.7 billion) against the target of PKR 500 billion set to mature in December.

The buyback cut-off yield was around 16% for the six- and 12-month papers.

The auction attracted bids totaling PKR 1.37 trillion, with the SBP picking up PKR 475bn from competitive bids and rejecting non-competitive bids.

Last week, the government conducted its first-ever buyback auction by the central bank to retire outstanding debt before its maturity date. These buybacks enable the government to reprofile its debt, potentially benefiting from lower interest expenses in the long run and correcting market distortions.

The government's decision to buy back its T-bills marks a significant development, reflecting an improving cash position and offering various positive economic implications.

The sharp decline in yields, with 12-month T-bills falling from 23% to around 14% and the 10-year bond from 17% to 12.7% indicates a faster-than-expected easing in interest rates.

This strategic buyback will likely enhance liquidity in the money market, drive yields down further, and improve the government's debt metrics.