Pakistan government raises Rs768bn in Treasury bill auction
The federal government raised Rs768 billion in a Treasury bill auction as banks and one provincial government continued parking large sums in low-risk public debt.
Pakistan’s federal government raised Rs768.4 billion through a Treasury bill auction on Wednesday, underscoring how much liquidity remains in the banking system and how heavily lenders are still tilted toward short-term government paper. According to the State Bank of Pakistan, banks submitted more than Rs2 trillion in bids, signalling strong appetite for risk-free returns at a time when the private sector continues to compete for financing. The auction results also showed that a provincial government placed Rs300 billion into public securities through accepted non-competitive bids, although the SBP did not identify which province was involved. The bulk of interest was concentrated in the shortest maturity. Bids for one-month T-bills reached Rs990.4 billion, close to Rs1 trillion, while banks offered Rs540 billion for three-month papers, Rs229.2 billion for six-month bills and Rs338 billion for 12-month securities. That pattern suggests investors remain cautious about locking money away for longer periods, possibly because of uncertainty around where interest rates are headed next. The government raised Rs376 billion through competitive bids and another Rs392.3 billion through non-competitive bids. Of the accepted non-competitive bids, Rs300 billion came from the provincial government mentioned by the central bank. In terms of individual tenors, the auction raised Rs44.6 billion in one-month papers, Rs333.8 billion in three-month bills, Rs210 billion in six-month bills and Rs179 billion in 12-month bills. The total amount raised came to Rs768.398 billion. That is broadly in line with the borrowing pattern seen in the previous fiscal year, according to the feed summary, and it reflects a familiar reliance on short-term domestic borrowing to meet financing needs. The Treasury bill market remains one of the easiest destinations for banks looking to deploy surplus cash because the returns are considered safe and the instruments are highly liquid. For the government, that makes the auction a reliable funding channel. But it also means large sums of bank money continue to flow into public debt rather than private lending. That is why the government has been trying to broaden participation. The feed notes that it has opened InvestPak accounts for the general public so retail investors can buy government securities directly. Officials believe wider public participation could eventually ease the pressure on banks to absorb so much of the sovereign’s borrowing, leaving more room for credit to businesses. What remains less clear from the available details is the exact direction of the next monetary policy decision and the cut-off yields from the auction, which were not included in the feed summary. Those figures will matter because they help show how much the market expects rates to change in the near term. For now, the takeaway is straightforward: cash is still abundant in the banking system, short-term government borrowing remains attractive, and lenders are showing little interest in taking on longer-dated risk until the interest-rate outlook becomes clearer.
Source: Dawn Business - https://www.dawn.com/news/2017647/govt-raises-rs768bn-via-treasury-bills-auction
