Pakistan's central bank raised PKR 688 billion through a treasury bills (T-bills) auction on Wednesday, as yields climbed across all tenors.
The 12-month yield rose to 12.59%, while the one-month tenor jumped the most as markets continued adjusting to tighter monetary policy.
How much did T-bill yields rise in Pakistan's latest auction?
The one-month yield jumped 86 basis points to 12.23%, the three-month rose to 12.49%, the six-month to 12.50%, and the 12-month to 12.59%. The State Bank of Pakistan raised PKR 688 billion overall.
The increase reflects markets adjusting to a higher interest rate environment.
Rising yields indicate higher borrowing costs for the government, as investors demand higher returns to lend. This typically occurs amid concerns over inflation, fiscal deficits, or tighter monetary conditions.
Why are Pakistan's T-bill yields rising?
The SBP raised its policy rate by 100 basis points to 11.5% on April 27. The increase was in response to escalating Middle East tensions and rising global oil prices.
The rate hike aimed to anchor inflation expectations and prevent second-round effects from supply shocks. T-bill yields have since adjusted upward to reflect the tighter conditions.
How much did Pakistan raise across each tenor?
The largest amount, PKR 431 billion, was raised through one-month T-bills. The government raised PKR 232 billion via three-month bills.
Six-month bills raised PKR 19 billion, while 12-month bills brought in just PKR 6 billion. The skew toward shorter tenors reflects investor caution amid rising rates.
Total participation included competitive bids of PKR 657 billion and non-competitive bids of PKR 31 billion. The SBP accepted PKR 688 billion overall.
What are T-bills and PIBs?
The Pakistan government raises money from local and foreign investors through debt instruments. T-bills are one such government-backed instrument.
Other instruments include Pakistan Investment Bonds (PIBs), National Savings instruments, Eurobonds, and International Sukuk. T-bills are short-term, highly liquid securities.
T-bills are issued in three, six, and 12-month tenors. The SBP auctions them every fortnight, on Wednesdays.
PIBs are debt securities issued by the State Bank of Pakistan. They are issued in denominations of multiples of PKR 100,000.
PIBs are available in tenors of three, five, 10, and 20 years. The yield on these bonds is fixed and disbursed semi-annually.
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