Cut-Off Yield on T-Bills Up by 129 BPS

The cut-off yields on Treasury Bills (T-Bills) were up by 96-129 basis points (bps) in the auction of the paper held on Wednesday.

According to the data released by the State Bank of Pakistan (SBP), the government raised Rs. 614 billion against an initial target of Rs. 500 billion and maturity of Rs. 343 billion in the auction as a result of the central bank’s unchanged interest rate.

Commenting on the auction results, CEO Topline Securities, Mohammad Sohail remarked, “When you have record fiscal deficit and you cannot borrow from SBP, this happens. Plus lack of efficient coordination between MoF and SBP”.

Official data indicates that the cut-off yields for the three-month T-Bills soared by 129 bps to 14.79 percent from 13.50 percent observed on 21 April. Similarly, proceeds for the six-month paper increased by 114 bps to 14.99 percent, while yields on the 12-month paper soared by 96 bps to 14.80 percent from 13.84 percent recorded in the previous auction.

The government raised Rs. 320 billion against a targeted amount of Rs. 200 billion for the three-month paper in the competitive auction, and it raised Rs. 135 billion against a target of Rs. 200 billion for the six-month paper.

Moreover, it raised Rs. 160 billion against a target of Rs. 100 billion through the 12-month bond during the auction.

The entire amount raised for the three-month paper was Rs. 369 billion, Rs. 140 billion for the six-month paper, and Rs. 162 billion for the 12-month paper.

A further breakdown of the official numbers indicates that the government raised Rs. 614 billion from the competitive auction and Rs. 58 billion through non-competitive bids, which made total proceeds of Rs. 672 billion.