Pakistan raises PKR 1.13 trillion through T-bills auction
Yield for one-month T-bill falls, increases for longer tenure bills
Business Desk
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The auction saw a participation of over PKR 2 trillion.
Pakistan’s central bank raised PKR 1.13 trillion through the auction of treasury bills (T-bills) on Wednesday.
According to the State Bank of Pakistan (SBP) data, PKR 1.13 trillion was raised against a target of PKR 950 billion.
The weighed average yield for the short-term, one-month T-bill, was reduced by 10 basis points (bps) from 11.09 % on October 15 to 10.99%. The yields for three-, six- and 12-month T-bills went up by 2, 6 and 8 bps to 11.02%, 10.94% and 11.29% respectively.
The auction, held for the first time after the SBP decided to maintain the interest rate at 11% on October 27, saw participation of PKR 2.13 trillion.
The one-year T-bill saw the largest amount raised – PKR 710 billion – showing investors’ preference for medium-term maturities due to the expectation of stable returns.
In the last auction on Oct 15, the SBP had raised PKR 742 billion.
The SBP had planned to raise PKR 4.82 trillion to meet fiscal financing needs and refinance maturing debt from September to November.
According to the Domestic Markets & Monetary Management Department, the central bank plans to generate PKR 2.87 trillion through seven T-Bills auctions by November 26. The auctions are intended to refinance PKR 4.01 trillion in maturing short-term debt.
What are T-bills and PIBs?
The Pakistan government raises money from local and foreign investors through debt instruments. T-bills are one of those instruments backed by the government. Other such instruments are Pakistan Investment Bonds (PIBs), National Savings instruments, Eurobonds, International Sukuk, etc.
T-Bills are short-term, highly liquid government securities issued in 3, 6, and 12-month tenors. The State Bank of Pakistan auctions T-bills every fortnight (on Wednesdays).
PIBs are debt securities issued by the State Bank of Pakistan. These bonds are issued in denominations of multiples of PKR 100,000 and available in tenors of 3, 5, 10, and 20 years. The yield on these bonds is fixed and disbursed semi-annually.
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