KARACHI: The government again slashed the cut-off yields on treasury bills (T-bills) while it raised Rs617.8 billion in an auction on Wednesday.

The cut-off yield on the benchmark six-month T-bills was slashed by14 basis points to raise Rs299.4bn. In the last auction held on April 21 the rate was slashed by 11bps.

The bidding trend showed presence of huge liquidity but little opportunity for banks to invest the money. Earlier report of the State Bank showed that deposits of banks have been increasing mainly on account of less consumption due to several reasons related with coronavirus.

The government received total bids of Rs1,618bn for the auction of T-bills while it accepted Rs617.8bn, including Rs61.2bn raised through non-competitive bids.

The government received highest bids of Rs906.13bn for 6-month papers while bids for three-month were Rs558.3bn. The government received just Rs154bn bids for 12-month while it accepted Rs25bn at the rate of 7.69pc.

The cut-off yield for three-month T-bills was reduced by 5bps to 7.35pc and raised Rs232.3bn.

Pakistan Investment Bonds

The government also raised Rs24bn through auction of long-term Pakistan Investment Bonds (PIBs) against the total bids of Rs42.5bn.

It raised Rs24bn for two years while the bids for three-year bonds were rejected.

The government also raised Rs1.9bn through auction of non-competitive bids.

The government has been using T-bills and PIBs to raise liquidity in the absence of funding from State Bank.

Published in Dawn, May 6th, 2021