Margin on short-term government papers has increased slightly in the auction held on Wednesday. Banks and financial institutions aggressively participated in the auction of Market Treasury Bills conducted by the State Bank of Pakistan (SBP) on Wednesday and overall received bids were almost 100 percent higher than the actual target set for this auction.
Tenders for Sale of 3-month, 6-month and 12-month government of Pakistan Market Treasury Bills (MTBs) were opened on Wednesday and the SBP received bids amounting to Rs 711.973 billion with realised value of Rs 690.318 billion. Most of bids were received for 6-month tenure.
Some Rs 223.247 billion bids for 3-month, Rs 316.323 billion for 6-month and Rs 172.403 billion for 12-month period were submitted. The cut-off yield on all MTBs witnessed upward trend in the auction and increased up to 6 basis points (bps). Bankers said that the market was expecting a cut in the discount rate in the monetary policy announced last Saturday, however as against expectations, independent Monetary Policy Committee (MPC) kept the policy rate unchanged at 5.75 percent, resulted the cut-off yield on T-bills rebounded and increased in the auction.
Out of received bids, the federal government accepted bids amounting to Rs 374.605 billion with realized amount of Rs 362.226 billion as against the target of Rs 350 billion for this auction. Cut-off yield of 3-month MTBs fixed at 5.8571 percent, up 4 bps, with accepting bids of Rs 82.617 billion (realized amount). With Rs 175.81 billion accepting bids, 6-month cut-off yield surged by 6 bps to 5.9046 percent. While cut-off yield of 12-month T-bills increased 5 bps to 5.9148 percent and bids amounting to Rs 103.798 billion (realized amount) were accepted.