Pakistan central bank raises PKR 478B through T-bills auction

Pakistan’s central bank raised PKR 478 billion through the auction of treasury bills or T-bills on Wednesday.

According to the State Bank of Pakistan (SBP), the borrowing was PKR 72 billion less than the targeted amount of PKR 550 billion.

The auction saw a participation of PKR 1.6 trillion.

The yields for the short-term, one-month and three-month T-bills reduced by 1 basis point (bps) from 11% on October 29 to 10.99%. The yields for six- and 12-month T-bills remained unchanged at 11.05% and 11.35% respectively.

The largest amount of PKR 310 billion was raised via the three-year bill, followed by PKR 111 billion via one-year tenor bill — both exceeding the borrowing targets. Investors showed little preference for long-term bills, with only PKR 14 billion and PKR 44 billion raised via the six-month and one-year bills against the target of PKR 150 billion each.

During the previous auction on October 29, SBP raised PKR 1.13 trillion against a target of PKR 950 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.