The State Bank of Pakistan (SBP) recently conducted a successful auction of Market Treasury Bills (MTBs), which exceeded expectations by selling MTBs worth Rs1.148 trillion.
The auction included bills with maturities of 3, 6, and 12 months, and this sale surpassed the target of Rs975 billion.
What's particularly noteworthy is the decline in cut-off yields across these maturities, signifying a positive trend. The cut-off yields for 3, 6, and 12 months dropped by 25 basis points (bps), 41 bps, and 40 bps, respectively. This reduction in yields reflects a potential shift in the interest rate environment.
Market enthusiasm was evident in the amount offered, with a total of Rs4.183 trillion on the table. The SBP accepted Rs1.148 trillion, showcasing strong demand. The highest ever bids for 12-month MTBs, exceeding Rs2.47 trillion, suggest that market participants are pricing in the peak of interest rates.
The SBP also secured Rs226.02 billion from the non-competitive auction, further contributing to the total amount accepted. This successful auction follows a similar one held on October 18, where the SBP sold MTBs worth Rs1.09 trillion against a target of Rs900 billion, with slightly higher cut-off yields. These results reflect evolving market dynamics and investor sentiment regarding Pakistan's monetary policy.
