Govt raises Rs900bn, cuts T-bill yields
KARACHI: Cut-off yields on treasury bills were slashed by up to 79 basis points at the auction held on Wednesday, with the government raising over Rs900 billion.
This was the first T-bills auction after the State Bank of Pakistan’s Monetary Policy Committee cut the benchmark interest rate by 50bps to 10.5pc from 11pc. The policy rate had remained unchanged since May 2025.
Market experts said the decline in T-bill yields was expected following the SBP’s rate cut. However, the 12-month T-bill yield fell by a sharper 79bps, exceeding the reduction in the policy rate.
The government raised the largest amount, Rs493.3bn, through three-month T-bills at a cut-off yield of 10.48pc. Another Rs276.6bn was mobilised through 12-month papers, with the cut-off yield reduced to 10.48pc from 11.27pc in the previous auction.
The lowest amount, Rs34bn, was raised through six-month T-bills, also at a cut-off yield of 10.48pc.
A notable feature of the auction was the large volume of non-competitive bids, through which the government raised Rs408bn. Competitive bids accounted for Rs503bn. Bankers termed the scale of non-competitive borrowing as unconventional.
Bids reflected excess liquidity in the banking system, with total offers amounting to Rs1.685 trillion. Separately, the government also raised Rs105bn through 10-year Pakistan Investment Bonds, taking the total amount mobilised on Wednesday to Rs1.016 trillion.
Bankers said the government’s borrowing needs were likely to increase in the second half of the current fiscal year as large profit payments by the SBP would have been absorbed.
Published in Dawn, December 25th, 2025
