Pakistan’s central bank raises PKR 195B via T-bills auction

Pakistan’s central bank raised PKR 195 billion against the target of PKR 175 billion through the auction of Market Treasury Bills (T-bills) on Wednesday, according to data released by the State Bank of Pakistan (SBP).

The auction saw the participation of PKR 1,071 billion, with the government raising PKR 195 billion and maturity of PKR 197 billion. The yields fell by 1 basis point (bps) for one-month and six-month T-bills, while remaining unchanged for three-month and 12-month T-bills.

The cut-off yield for one-month T-bills fell by 1bps from 10.75% on September 3 to 10.74%. the yield for six-month T-bills fell from 10.85% to 10.84%. The yields for three-month and 12-month T-bills remained unchanged at 10.85% and 10.99% respectively.

Earlier this month, SBP raised over PKR 491 billion in the T-Bills auction against its target of PKR 400 billion. The central bank plans to raise a total of PKR 4.82 trillion to meet fiscal financing needs and refinance maturing debt in three months from September to November.

According to the Domestic Markets & Monetary Management Department, the central bank plans to generate PKR 2.87 trillion through seven Market Treasury Bills (MTBs) or T-Bills auctions scheduled between September 3 and November 26. The auctions are intended to refinance PKR 4.01 trillion in maturing short-term debt.

What are T-Bills?

The Pakistan government raises money from local and foreign investors through debt instruments. T-Bills or MTBs are one of those instruments backed by the government. Other such instruments are PIBs, National savings instruments, Eurobonds, International Sukuk, etc.

MTBs are short-term, highly liquid government securities issued in 3, 6, and 12-month tenors. The State Bank of Pakistan auctions MTBs every fortnight (on Wednesdays).