SBP raises record Rs3,100 billion through MTBs auction at cut-off yield higher than key policy rate

KARACHI: The State Bank of Pakistan (SBP) has raised record huge amount of Rs3,100.71 billion through an auction of Market Treasury Bills (MTBs) at a cut-off yield much higher than the key policy rate of 12.25 percent.
The central bank on Wednesday received bids in 3- and six-month treasury bills worth Rs3,176.56 billion at face value of Rs3,268.59 billion. The SBP has not received bids for 12-month treasury bills.
The SBP accepted bids of Rs3,100 billion at face value of Rs3,190 billion. The central bank accepted Rs3,099 billion against three-month MTBs at face value of Rs3,188.99 billion at cut-off yield of 12.7495 percent. For benchmark six-month treasury bills an amount of Rs1.41 billion were accepted at face value of Rs1.5 billion and at cut-off yield of 12.80 percent.
The amount raised was much higher than the target set for this auction. The central bank had set Rs600 billion target for the auction.
Market analysts said that banks were still anticipating further increase in interest rate in next monetary policy announcement.
In the recent monetary policy the SBP increased the key policy rate by 150 basis points to 12.25 percent for next two months starting May 21, 2019.
The SBP conducts auction of securities for the government to meet budgetary deficit. The fiscal deficit has been increased to 5 percent during July – March 2018/2019, which is already cross the target of 4.9 percent for full fiscal year.
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