Following reduction in key policy rate, margin on all short-term government papers declined up to 250 basis points (bps) in the auction held Wednesday.

The State Bank of Pakistan (SBP), on April 22, 2020, conducted the auction for sale of 3-, 6- and 12-month Market Treasury Bills (MTBs) and received bids amounting to Rs 1.45 trillion. Out of the received bids, the federal government accepted bids amounting to Rs 435.5 billion with realized amount of Rs 417.83 billion against the target of Rs 500 billion set by the government for this auction.

Followed by a massive cut of 200 basis points in the key policy rate to minimize the coronavirus shock on economic growth, the cut-off yield of all T-Bills witnessed a downward trend in Wednesday's auction. Margin on all short-term government papers fell from 217 bps to 250 bps.

The cut-off yield of 3-month MTBs declined by 250 bps to fix at 8.3996 percent with accepting bids of Rs 164.025 billion. Bids amounting to Rs 126.5 billion were accepted for 6-month MTBs and its cut-off yield was set at 7.9997 percent, down 230 bps. The cut-off yield of 12-month T-bills fell 217 bps to 7.4750 percent and bids amounting to Rs 145 billion were accepted.