Govt Raises Rs. 258 Billion Via T-Bills, Cut-Off Yield Soars up to 206 BPS

The cut-off yields on Treasury Bills (T-Bills) went up by 206 basis points (bps) in the auction of the paper held on Wednesday, signaling a likely hike in the policy rate in the coming days.

According to the data released by the State Bank of Pakistan (SBP), the government raised Rs. 258 billion against a target of Rs. 300 in the auction.

SBP raised PKR 258bn against a target of PKR 300bn

– 3M cut-off: 19.9500%, +195bps
– 6M cut-off yields: 19.9000%, +206bps
– 12M cut-off yields: 19.7900%, +184bps
– SBP received bids of PKR 347bn.@StateBank_Pak#SBP #TreasuryBills #Auction #Pakistan #Economy #AHL pic.twitter.com/Ku1qKHB51r

— Arif Habib Limited (@ArifHabibLtd) February 22, 2023

Official data indicates that the cut-off yield for the 3-month T-Bills went up by 195 bps to 19.9500 percent from 17.9996 percent observed on February 8. The cut-off yield for the 6-month T-Bills went up by 206 bps to 19.9000 percent from 17.8400 percent observed on February 8. Similarly, the cut-off yield for the 12-month T-Bills went up by 184 bps to 19.7900 percent from 17.9499 percent observed on February 8

The government raised Rs. 151.74 billion for the three-month paper in the competitive auction. It also raised Rs. 12 billion and Rs. 10 billion for the 06-month and 12-month T-Bills respectively.

A further breakdown of the official numbers indicates that the government also raised Rs. 84.01 billion through non-competitive bids. This took the total amount raised during the auction to Rs. 257.74 billion.

Commenting on the auction result, Economic analyst A. A. H. Soomro said in a tweet that the result hints at a 200 bps hike in the policy rate. He added that this would clearly not be sustainable in a normal economy.