Govt raises Rs1.62 trillion via T-bill, bond auctions

Investor interest shifts towards longer-term papers as yields decline

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KARACHI:

The State Bank of Pakistan (SBP) mobilised approximately Rs1.62 trillion through its latest auctions of government securities, of which a substantial proportion, Rs1.413 trillion, was raised from Market Treasury Bills (MTBs) and Rs208.42 billion from 10-year Pakistan Investment Bonds Floating Rate (PFL).

The MTB auction reflected strong investor appetite across all four tenors. The SBP accepted bids worth Rs214.28 billion for one-month papers at a cut-off yield of 11.24%, Rs474.70 billion for three-month papers at 10.9977%, Rs180.52 billion for six-month bills at 10.8976% and Rs543.88 billion for 12-month bills at 10.80%. The highest allocation was seen in the 12-month tenor, indicating increasing investor interest in slightly longer-term instruments amid a downward yield trend.

Non-competitive bids in the MTB auction totalled Rs379.78 billion, with a major share – Rs310.63 billion – going into the three-month tenor, further underscoring the market's preference for shorter durations. In the 10-year PFL auction, the SBP accepted competitive bids worth Rs202 billion and non-competitive bids of Rs6.42 billion, with the issue settling at a cut-off price of Rs94.5739.

Although the total raised slightly missed the Rs1.7 trillion mark, analysts note that the dominance of MTBs and a flattening yield curve suggest growing interest in longer-tenor government securities. Market watchers await details of any additional auctions that could bridge the gap and complete the government's near-term borrowing target.

Moreover, the Pakistani rupee experienced a slight depreciation against the US dollar in the inter-bank market, closing at Rs284.47 to a dollar, down 0.04% from the previous day's rate of Rs284.36.

Gold drops Rs3,000/tola

Local gold prices dropped on Wednesday, mirroring a decline in the international market where rates fell to their lowest level in over a week due to a stronger US dollar and ongoing trade negotiations involving the United States.

According to the All Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold per tola fell Rs3,000 to settle at Rs351,500, while the rate for 10 grams dropped Rs2,572, closing at Rs301,354. This followed a rise on Tuesday when gold had gained Rs1,500 per tola to reach Rs354,500.

Spot gold was down 0.1% at $3,297.19 per ounce, as of 9:23 am ET (1323 GMT), after hitting its lowest level since June 30 earlier, according to Reuters. US gold futures fell 0.3% to $3,306.10.

The US dollar index hovered near a two-week high, making bullion less attractive for overseas buyers. The yield on benchmark 10-year US Treasury notes remained close to a three-week peak.