State Bank of Pakistan raises PKR 1,645 billion through sale of treasury bills and bonds

The State Bank of Pakistan raised a total of 1,645.5 billion through the sale of market treasury bills (T-Bills) and floating Pakistan Investment Bonds (PIBs) with yields on both instruments remaining unchanged.

The last T-bills auction of the year saw participation of PKR 1,694 billion, with the government raising PKR 913 billion against a target of PKR 1,200 billion and a maturity of PKR 1,565 billion.

Current yields stood at 11.99% for the three-month bond, 11.99% for the six-month bond, and 12.29% for the 12-month bond.

Moreover, country’s central bank raised PKR 732.5 billion through floater PIBs against a target of PKR 650 billion. The spreads on the investment bonds also remained unchanged at 0.95% for two-year papers and 1.45% on five-year paper.

It may be mentioned here the foreign investors have withdrawn 64% of their investments from Pakistan's T-Bills, with outflows reaching $550.6 million in the first five months of fiscal year 2024-25 (FY25).

Experts attribute this trend to falling interest rates, with T-Bill yields dropping sharply due to a 900 basis points cut in the policy rate since June.

Political uncertainty and better investment options abroad further deterred foreign inflows, which were net zero in early December. The highest inflows came from the UK ($596.6 million), UAE ($85 million), Australia ($52 million), and Bahrain ($50 million), but these were accompanied by significant outflows.

Experts warn that foreign investments in T-Bills could continue to dry up in the coming months.