KARACHI: The cut-off yield on short-term investment papers declined sharply ranging from 171 basis points to 217 basis points in the auction held on Wednesday.

The State Bank of Pakistan (SBP) conducted the auction for the sale of 3-, 6- and 12-month government of Pakistan Market Treasury Bills (MTBs) and received bids amounting to Rs 4.57 trillion.

Most of the bids worth Rs 3.8 trillion were received for the 3-month, while 6-month MTBs fetched bids amounting to Rs 364 billion and 12-month Rs 358 billion.

The federal government raised Rs2.36 trillion including Rs 225 billion of non-competitive bids through sale of short term security papers as against target of Rs2.25 trillion and maturity of Rs2.43 trillion.

Yields on 3-, 6- and 12-month bonds fell by 171-217bps.

Analysts said the decline in the cut-off yield is due to recent monetary policy announcement in which the Monetary Policy Committee of the State Bank of Pakistan kept the Policy rate unchanged at 22 percent. An amount of Rs 2.35 trillion (including non-competitive bids) was borrowed at cut-off yield of 22.7898, down by 171 bps.

The cut-off yield of 6-month fell by 199 bps to 22.80 percent against borrowing of Rs 6.2 billion. In addition, the cut-off yield declined by 217 bps to 22.90 percent and an amount of Rs 8 billion was raised.

Copyright Business Recorder, 2023