Pakistan’s key lending rates, reflected in the Karachi Interbank Offered Rate (KIBOR), witnessed a significant drop following a successful government bond auction. The 6-month KIBOR, a crucial benchmark for consumer and business loans, fell by 18 basis points (bps) in a day-on-day comparison.
This decline came after a domestic bond auction that surpassed expectations, raising Rs. 501 billion – exceeding the targeted amount of Rs. 360 billion. Data from the State Bank of Pakistan (SBP) revealed the 6-month KIBOR settled at 21.07% after the mid-week auction.
The attractive yields offered, around 100 bps lower than the SBP’s policy rate of 22%, enticed investors and contributed to the decrease in KIBOR. Other KIBOR rates also saw a decline – the 3-month KIBOR fell 25 bps to 21.09%, and the 1-year KIBOR dropped 10 bps to 20.38%.
The auction results mirrored this positive sentiment. Cut-off yields for Treasury Bills (T-Bills) witnessed a noteworthy reduction. The 3-month T-Bills yield dropped by 60 bps to 21.0001%, while the 6-month and 12-month T-Bills yields fell by 29 bps and 31 bps respectively, settling at 21.0000% and 20.1001%.
The government successfully secured Rs. 122.40 billion for the 3-month T-Bills, Rs. 70.42 billion for the 6-month T-Bills, and Rs. 182.98 billion for the 12-month T-Bills through competitive bids. Including non-competitive bids, the total amount raised reached Rs. 501 billion, signifying strong investor demand and a positive outlook in Pakistan’s financial market.