September 22, 2023
Economy Pakistan

Treasury Bill Cut-Off Yields Rise by 114 Basis Points in State Bank of Pakistan Auction

The State Bank of Pakistan (SBP) has released data on the latest auction of Treasury Bills (T-Bills) which took place on Wednesday. The government raised Rs. 1,141 billion, exceeding its target of Rs. 900 billion in the auction. However, the cut-off yields on T-Bills saw a significant increase of 114 basis points (bps).

The official data released by the SBP shows that the cut-off yield for the 3-month T-Bills increased by 100 bps to 21.9995 percent from 20.9996 percent observed on March 8. Similarly, the cut-off yield for the 6-month T-Bills surged by 114 bps to 21.9901 percent from 20.8498 percent on March 8. The cut-off yield for the 12-month T-Bills also increased by 50 bps to 21.4899 percent from 20.9899 percent.

In the competitive auction, the government was able to raise Rs. 949.46 billion for the three-month paper, Rs. 15.50 billion for the six-month paper, and Rs. 151 billion for the 12-month paper. The total amount raised during the auction was Rs. 1140.86 billion.

The government was also able to raise Rs. 24.91 billion through non-competitive bids. This amount, when added to the amount raised through competitive bids, takes the total amount raised during the auction to Rs. 1,141 billion.

The increase in the cut-off yields on T-Bills is likely due to the recent rise in inflation and the current economic situation in the country. Despite the surge in yields, the government was able to exceed its target for the auction.

The rise in cut-off yields may be seen as a positive step by investors, as it indicates an improvement in the country’s economic situation. Higher yields on T-Bills are generally viewed as an attractive investment opportunity for investors, particularly in times of economic uncertainty.

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