Pakistan raises PKR853 billion in T-bill auction as yields jump

Pakistan raised PKR853 billion through an auction of Market Treasury Bills on Wednesday, exceeding the government’s PKR700 billion target as cutoff yields rose sharply across the three-, six- and 12-month tenors, according to Topline Securities data based on State Bank of Pakistan figures.

The auction attracted total participation of PKR2.726 trillion. The government raised PKR387 billion through competitive bids and PKR466 billion through noncompetitive bids, while maturities stood at PKR743 billion, according to Topline.

The government accepted PKR232 billion in one-month bills at a cutoff yield of 11.6794%. Bids for the tenor had been rejected in the previous auction on September 16.

It also raised PKR467 billion through three-month bills, PKR99 billion through six-month bills and PKR55 billion through 12-month bills.

Participation was strongest in the one-month tenor at PKR1.483 trillion, followed by PKR599 billion for three-month bills, PKR286 billion for six-month bills and PKR358 billion for 12-month bills.

In the secondary market, yields on three-, six- and 12-month T-bills stood at 11.64%, 11.84% and 12.20%, respectively, according to Topline.

How much did T-bill yields rise?

The three-month cutoff yield increased by 61 basis points to 11.9944% from 11.3849% in the September 16 auction. The six-month yield rose 75 basis points to 12.45% from 11.70%, while the 12-month yield climbed 49 basis points to 12.4945% from 12%.

The increases point to a sharp rise in the government’s short-term borrowing costs compared with the previous auction.

What happened in the Sukuk auction?

In a separate auction, the government raised about PKR116 billion through Government of Pakistan Hybrid Sukuk against a target of PKR300 billion.

The auction attracted total participation of about PKR568 billion.

The government raised about PKR25 billion through three-month Hybrid Sukuk, with the cutoff yield rising 45 basis points to 11.9545%.

It accepted about PKR15 billion in six-month Sukuk at a cutoff yield of 12.25%. Bids for the tenor had been rejected in the previous auction.

The government raised about PKR7 billion through one-year Hybrid Sukuk, with the cutoff yield increasing 51 basis points to 12.4945%.

It also raised about PKR70 billion through 10-year variable rental-rate Sukuk. The cutoff yield increased by 5 basis points to 11.6754% from 11.6284%.

The results show a sharp increase in short-term government borrowing costs, while the 10-year Sukuk yield edged higher.