Pakistan's short term bonds yield at 30-month low

The State Bank of Pakistan (SBP) held a treasury bills (T-bills) auction on Wednesday, raising PKR 568 billion against a target of PKR 800 billion, with total participation amounting to PKR 2.49 trillion.

The yield on the three-month bonds decreased by 70 basis points to 12.99% compared to the last auction on November 13. The yield for the six-month bonds declined 61 basis points to 12.89%, while the yield for the 12-month bonds are down 10 basis points to 12.35%.

The three-month yield has reached its lowest level since April 2022, while the six-month and 12-mopnth yields have dropped to levels last seen in March 2022.

The government aims to raise PKR 8.7 trillion through treasury bills and bonds from November to January to meet budgetary needs and refinance debt. This includes PKR 5.5 trillion through short-term T-bills with maturities of three, six, and 12 months, and PKR 3.2 trillion through Pakistan Investment Bonds (PIBs) with maturities of two, three, five, and 10 years.

The total maturity amount for T-bills and PIBs during this period is projected to be PKR 6.85 trillion. An analyst said the auction target reflects the government's borrowing needs to meet higher fiscal demands, refinance debt, and stabilize the economy.