SBP raises Rs584b via T-bills, Sukuk

Yields hit multi-year lows; gold prices hit Rs277,000/tola on global trends, rupee edges down

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KARACHI:

The government has raised a total of Rs584.5 billion through the auction of Treasury Bills (T-Bills), Pakistan Investment Bonds (PIBs), and Government Islamic Sukuk (GIS) on Wednesday. Of the total amount, Rs434 billion was generated through T-Bills, Rs11.9 billion from PIBs, and Rs138 billion from the GIS auction (across all tenors).

The Pakistan Stock Exchange (PSX) held a GIS auction on the day, which saw strong participation, with a total of Rs536 billion — more than double the target of Rs250 billion — according to AHL. The government successfully raised Rs138 billion across all tenors, with the majority of the funds coming from the 10-year Variable Rate Rental (VRR) Sukuk. Additionally, yields on Fixed Rate Rental (FRR) Sukuk witnessed a marginal decline of 1 to 6 basis points compared to the last auction.

In the T-Bill auction, the State Bank of Pakistan (SBP) raised Rs434 billion, exceeding its Rs250 billion target. Yields for the 3-month, 6-month, and 12-month T-Bills dropped to multi-year lows at 11.7848%, 11.7899%, and 11.8004%, respectively. These figures represent declines of 22 to 50 basis points, marking the lowest levels since early 2022. Total bids received for T-Bills amounted to Rs1,552 billion, significantly surpassing the auction target.

In the T-Bill auction, participation amounting to Rs1,701 billion was noted. The government raised Rs434 billion, surpassing its target of Rs250 billion. However, this amount fell short of the maturity figure of Rs654 billion.

The auction results also indicated a decline in yields, which dropped by 21 to 50 basis points.

"The government has ample liquidity," said Maaz Azam, Head of Research at Optimus Capital Management, commenting on the government's decision to raise more than the target but less than the maturity amount. The Open Market Operations (OMO) is down as well, meaning the SBP is injecting less liquidity into the market since there is currently not much demand from the private sector. This mainly reflects the government's liquidity position, he added.

Gold prices also saw an upward trend on Wednesday. In the local market, the price of gold per tola rose by Rs1,000, reaching Rs277,000, according to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). Internationally, gold climbed to $2,652 per ounce, including a $20 premium, reflecting a $10 increase during the day.

"Gold has made a low of $2,645 but is holding steady at $2,666," said Adnan Agar, Director of Interactive Commodities. He linked the price rise to reports of former US President Donald Trump potentially imposing a national economic emergency if re-elected.

Meanwhile, the rupee depreciated by 0.02% against the US dollar in the interbank market, closing at 278.72, down from 278.67 the previous day. Zafar Paracha, Secretary General of the Exchange Companies Association of Pakistan, remarked that the currency market remains stable with minor fluctuations of 5-10 paisa, reflecting normal supply and demand dynamics.