Pakistan raises PKR 1.65 trillion through T-bills and sukuk

The government raised more than PKR 1.65 trillion through treasury bill and sukuk auctions settled on June 24, while rejecting all bids for a 10-year floating-rate bond, highlighting strong investor demand for short-term and Shariah-compliant instruments amid a declining interest-rate environment.

According to auction results released by the State Bank of Pakistan (SBP), the government mobilized PKR 1.243 trillion through market treasury bills (MTBs), PKR 372.8 billion through Government of Pakistan Hybrid Sukuk (GHS), and accepted PKR 38.4 billion in Government of Pakistan Ijarah Sukuk (GIS) purchases on a deferred-payment basis. However, it raised no funds through the auction of 10-year Floating Rate Pakistan Investment Bonds (PFLs) after rejecting all bids.

Treasury bills raise PKR 1.243 trillion

The largest inflow came from the MTB auction, where total bids worth PKR 3.09 trillion were submitted across one-month, three-month, six-month and 12-month tenors.

The government accepted PKR 1.061 trillion through competitive bids and an additional PKR 182.16 billion through non-competitive bids, bringing total accepted bids to PKR 1.243 trillion.

The 12-month paper attracted the strongest demand, accounting for PKR 1.75 trillion in bids and PKR 603.6 billion in accepted competitive bids at a cut-off yield of 11.8381%.

The six-month tenor secured PKR 187.05 billion at a cut-off yield of 11.7479%, while the one-month and three-month papers raised PKR 148.7 billion and PKR 121.34 billion, respectively.

Provincial governments invested PKR 100 billion through non-competitive bids, all of it concentrated in the three-month tenor.

SBP rejects all 10-year floating-rate bond bids

In contrast, the government failed to raise any funds through the auction of 10-year Floating Rate Pakistan Investment Bonds.

Primary dealers submitted bids worth PKR 302.5 billion within a quoted price range of 94.0322 to 96.0004. However, the SBP rejected all competitive bids and accepted no non-competitive bids, leaving the total accepted amount at zero.

The decision suggests the government was unwilling to accept the pricing demanded by investors for longer-term floating-rate debt.

Hybrid sukuk exceed target

Separately, the government exceeded its combined PKR 350 billion target in the latest Hybrid Sukuk auction conducted through the Pakistan Stock Exchange auction platform.

Total accepted bids reached PKR 372.8 billion across fixed-rate and variable-rate instruments.

The one-year fixed-rate discounted Hybrid Sukuk attracted bids worth PKR 507.74 billion against a target of PKR 150 billion. The government accepted PKR 180.59 billion, including PKR 173.58 billion through competitive bids at a cut-off rental rate of 11.688% and PKR 7.01 billion through non-competitive bids.

Investor interest was even stronger in the 10-year variable rental-rate Hybrid Sukuk, where bids totaled PKR 956.5 billion against a target of PKR 200 billion.

The government accepted PKR 192.25 billion, including PKR 190.85 billion through competitive bids and PKR 1.4 billion through non-competitive bids.

Deferred-payment Ijarah Sukuk adds PKR 38.4 billion

In another Shariah-compliant financing transaction, the SBP conducted an auction for the outright purchase of Government of Pakistan Ijarah Sukuk on a deferred-payment, or Bai Muajjal, basis.

Total offers received amounted to PKR 270.05 billion, with the overwhelming majority concentrated in the 1,096-day tenor.

The government accepted PKR 38.4 billion in face-value terms, generating a deferred Bai Muajjal value of PKR 56.14 billion.

The longest tenor accounted for PKR 30.4 billion of accepted bids, while the 365-day and 183-day tenors contributed PKR 5 billion and PKR 3 billion, respectively.

The auction results indicate continued investor preference for short-term government securities and Shariah-compliant instruments, while demand for longer-term conventional debt remained constrained at the yields offered by the government.