Pakistan’s central bank raises PKR 435B through PIB auction

Pakistan’s central bank raised PKR 435 billion through the auction of Pakistan Investment Bonds or PIBs on Wednesday.

According to the State Bank of Pakistan (SBP), the borrowing was PKR 35 billion more than the targeted PKR 400 billion.

The yields for PIBs fell by over 70 basis points (bps), reflecting a much more stable monetary condition in Pakistan.

The yields for two-year PIBs fell by 70bps from 11.48% to 10.78%. The yields for the three-year bond fell by 65 bps to 10.84%, the five-year bond’s by 45bps to11.19%, 10-year bond’s by 34bps to 11.66% and 15-year bond by 25bps to 11.99%

The largest amount of PKR 100 billion was raised via the three-year and 10-year bonds, followed by PKR 75 billion via the two-year and five-year bonds. The central bank only raised PKR 50 billion through the 15-year bond.

The auction took place two days after Pakistan's central bank cut the policy rate by 50 bps to 10.5%, the lowest level since March 2022.

The central bank's Monetary Policy Committee decided to cut the policy rate after keeping it unchanged in four consecutive meetings since May.

According to analysts, lower interest rates help the government in raising money at favorable terms as the overall borrowing costs and debt interest payments go down.

The SBP has planned to raise PKR 1.2 trillion via three PIB auctions to meet financing needs from December to February 2026.

Earlier on December 10, Pakistan’s central bank raised PKR 982 billion through the auction of treasury bills or T-bills. The borrowing was PKR 18 billion short of the targeted PKR 1 trillion.

What are PIBs?

The Pakistan government raises money from local and foreign investors through debt instruments. T-bills are one of those instruments backed by the government. Other such instruments are Pakistan Investment Bonds (PIBs), National Savings instruments, Eurobonds, International Sukuk, etc.

T-Bills are short-term, highly liquid government securities issued in 3, 6, and 12-month tenors. The State Bank of Pakistan auctions T-bills every fortnight (on Wednesdays).

PIBs are debt securities issued by the State Bank of Pakistan. These bonds are issued in denominations of multiples of PKR 100,000 and available in tenors of 3, 5, 10, and 20 years. The yield on these bonds is fixed and disbursed semi-annually.