Pakistan slashes T-Bill yields by up to 100 basis points

The government slashed the rate of treasury bills by up to 100 basis points on Wednesday in an auction held days before the announcement of the monetary policy.

Commercial banks participated in the auction with PKR 1.93 trillion, while the government raised PKR 1.26 trillion against the target of PKR 1.2 trillion.

Yields declined by 5-100 basis points, with current yields at 11.99% for the 3-month bond, 11.99% for the 6-month bond, and 12.29% for the 12-month bond.

In the last auction on November 27, the government raised PKR 616 billion against a target of PKR 800 billion. Yields declined by 61 to 85 basis points to 12.99% for the 3-month bond, 12.89% for the 6-month bond, and 12.35% for the 12-month bond.

The financial market expected a cut in T-bill rates as the secondary market showed a downward trend. Analysts estimate a rate cut of up to 200 basis points, supported by the cut in T-bill rates.

It may be mentioned here the Pakistan government will borrow PKR 4,850 billion from banks through the sale of treasury bills and investment bonds from December to February of FY2025 to finance the repayment of maturing securities.