KARACHI: The government on Wednesday raised over Rs1.519 trillion through auction of market treasury bills, but most of the amount was borrowed for the three-month tenure.

The government received the highest bids of Rs1,538 billion for three-month T-bills and accepted Rs1,130.68bn. The cut-off yield on this paper was reduced by 5 basis points to 7.53 per cent compared to 7.58pc in the previous auction held on March 10, the State Bank of Pakistan reported.

The cut-off yield on benchmark six-month T-bills remained unchanged at 7.8pc while the government raised Rs388.9bn. The bids for this tenure were Rs468.08bn.

All bids (Rs62.8bn) for 12-month were rejected. The total bids for T-bills for this auction were Rs2,042.929bn while the government accepted Rs1,519.582bn.

The auction trend shows that the banks were over-liquid as they were willing to park maximum liquidity in government papers. At the same time, both the government and the investors were on the same page for the short-term three-month T-bill. The investors were cautious over the interest rate that may change upward in the coming months depending upon the intensity of inflationary pressures.

PIBs auction

The government accepted Rs1.150bn for two-year PIBs and rejected all bids for three-year. Total bids for the auction of PIBs were Rs5.95bn. The government also raised Rs2.2bn through PIBs as non-competitive bids.

Published in Dawn, March 25th, 2021