KARACHI: Treasury bill cut-off yields rose for a second consecutive auction on Wednesday, lifting returns further into double digits and taking the 12-month paper above the policy rate of 10.5 per cent.

In the previous auction, held after the monetary policy statement on Jan 26, T-bill yields rose by up to 39 basis points, moving some tenors from single digits into double digits.

Market participants said the latest outcome further dampened expectations of a near-term policy rate cut and suggested the benchmark rate could remain unchanged for an extended period.

Data released by the State Bank of Pakistan (SBP) showed the largest increase was recorded on the 12-month tenor, where the cut-off yield rose by 20 basis points to 10.60pc.

Govt borrows Rs677bn; return on 12-month paper exceeds policy rate

In the Feb 6 auction, the 12-month yield had increased by 39 basis points, taking the cumulative rise over the two auctions to almost 60 basis points and placing the one-year paper above the policy rate.

By contrast, the one-month cut-off yield fell by four basis points to 10.15pc, while the three-month and six-month yields rose by nine and 12 basis points to 10.28pc and 10.44pc, respectively.

Total bids at the auction stood at Rs1.265 trillion. The government accepted Rs319.8 billion through auction and Rs357.5bn in non-competitive bids, taking total borrowing to Rs677.3bn.

Analysts said higher T-bill yields would add to the government’s debt-servicing burden. Int­erest payments in the current fiscal year are projected at around Rs8tr, the single largest component of federal expenditure.

Financial sector experts said the higher yields could appeal to foreign investors, who invested $176m in January, but noted that the overall situation remained weak as 68pc of investment had returned during the first seven months (July-January) of the ongoing fiscal year.

Some analysts had expected a policy rate cut of up to 100 basis points ahead of the previous auction, but the SBP left the rate unchanged. The two successive increases in T-bill cut-off yields have strengthened market expectations that the policy rate may remain unchanged through the current fiscal year.

Published in Dawn, February 19th, 2026