State Bank of Pakistan conducted T-Bill Auction on 7-April-2022 on behalf of the Government and raised PKR 679.89 billion against a target of PKR 600 Billion. The cut-off rates in this T-Bill auction shot up as market anticipate rate hikes in subsequent Monetary Policies.

The cut-off yields for Three, Six, and Twelve months witnessed an increase of 80, 75, and 60 basis points respectively to stand at 12.80%, 13.25%, and 13.30%.

Tenders for Sale of 3 – Month, 6 – Month & 12 – Month Government of Pakistan Market Treasury Bills were invited by State Bank of Pakistan through Primary Dealers on April 06, 2022 with settlement date on April 07, 2022. Bids were received as follows:

Amounts in PKR Million

TenorRealized ValueFace Value
03 Month490,773505,073.840
06 Month178,700190,533.160
12 Month189,942215,432.450
Total859,414911,039.450

The result is as under:

Amounts in PKR Million

TenorRealized ValueFace ValueCut-Off YieldWeighted
Average Yield
03 Month362,951.373,305.84012.80%12.40%
06 Month139,226.400148,283.16013.25%13.05%
12 Month109,144.123,463.70013.30%13.16%
Total611,322.645,052.700  

In addition to above Non-Competitive Bids accepted are as under:

Amounts in PKR Million

TenorRealized ValueFace Value
03-Month20,432.8521,015.79
06-Month7,636.698,133.47
12-Month5,030.045,689.98
Total33,099.5734,839.23

Total acceptance in Auction inclusive of Non-Competitive Bids is as follows:-

Amounts in PKR Million

TenorRealized ValueFace Value
03-Month383,384.01394,321.63
06-Month146,863.09156,416.63
12-Month114,174.37129,153.68
Total644,421.47679,891.93

In its March-2022 Monetary Policy announcement , SBP maintained the Policy rate at 9.75 percent citing moderating of growth and stabilization of Inflation.

However, Money Market Participants remain wary of the overall economic situation and expects ate hike in Subsequent Monetary Policies.

Inflation for the FY2022 period is expected to average around 11 percent, leaving a negative gap of 1.25 percent in Real Interest Rate.

Hence, market yields are adjusting to that ‘Gap’ factor.

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