The State Bank of Pakistan (SBP) successfully concluded two major debt auctions on Wednesday, mobilizing a total of Rs636 billion through Market Treasury Bills (MTBs) and Pakistan Investment Bonds – Floating Rate (PFL). The auctions reflected stable cut-off yields across most tenors, signaling that investors expect near-term interest rates to remain steady.
The government raised Rs526.97 billion (face value) via the sale of short-term treasury bills of varying maturities, including 1-month, 3-month, 6-month, and 12-month instruments. Non-competitive bids were also part of the accepted volume, showing consistent participation across the banking sector and institutional investors.
The one-month T-Bill generated Rs88.8 billion at a cut-off yield of 10.90 percent, slightly above the weighted average of 10.87 percent. For the three-month tenor, Rs66.2 billion was mobilized, with the yield stabilizing at 10.85 percent. Similarly, the six-month T-Bill saw an inflow of Rs76.5 billion, also at 10.85 percent. The 12-month instrument drew the highest level of participation, with Rs295.4 billion accepted at a cut-off yield of 10.999 percent, marginally higher than other short-term tenors.
The outcome of these auctions highlights that yields are clustering within the 10.8 to 11 percent range, indicating a broad market consensus that the current monetary policy stance will likely hold in the short run. Market participants appear to be balancing liquidity deployment with cautious positioning, as clarity on inflation and monetary direction evolves in the months ahead.
In a parallel auction, the SBP successfully raised Rs109.3 billion (face value) through the issuance of 10-year floating rate Pakistan Investment Bonds. The settlement of these securities is scheduled for August 21, 2025. Competitive bids worth Rs100 billion were received, complemented by an additional Rs9.25 billion through non-competitive participation.
The cut-off price for the floating PIBs was determined at 95.5244, which fell within the quoted price range of 93.48 to 95.52. This reflects investor caution as they position around current floating benchmarks, preferring instruments that offer protection against future changes in interest rates. Floating rate bonds have increasingly gained attention among investors who are seeking a balance between risk and return in an environment where long-term interest rate movements remain uncertain.
The successful mobilization of funds in both auctions underscores the central bank’s ability to meet government borrowing requirements while providing the market with avenues to manage liquidity. It also reinforces the banking sector’s appetite for both short-term and floating rate instruments, indicating confidence in the stability of the financial system.
For policymakers, the results serve as a barometer of sentiment within the debt market. Stable yields reflect that the market does not anticipate aggressive shifts in monetary policy in the immediate term. However, the participation patterns also reveal that investors remain cautious, preferring diversified instruments to manage risk.
With over Rs636 billion raised in a single round of auctions, the SBP continues to play a critical role in balancing the government’s funding needs with the market’s demand for secure, interest-bearing instruments. The auctions demonstrate the ongoing depth of Pakistan’s debt market and its significance in sustaining fiscal and monetary stability.