Key Takeaways
- The government kept treasury bill rates unchanged in the latest auction.
- Returns on all tenors of T-bills remained higher than the State Bank’s policy rate of 11.5 per cent.
- Investors, mostly banks, were eager to invest in government securities.
The government maintained treasury bill rates at the latest auction, which was held on Wednesday, ensuring that returns on all tenors of T-bills remained higher than the State Bank’s policy rate of 11.5 per cent.
The auction resulted in the government raising Rs417.6 billion, with an additional Rs267.9 billion from non-competitive bids, totaling Rs685.5 billion.
Investors, primarily banks, were keen to invest in government securities due to limited options for domestic lending and concerns over the Gulf war and political uncertainty in the country.
Financial experts noted that investors are hesitant to take risks amid these uncertainties, reflecting a cautious approach to the current economic climate.
The government’s reliance on bank money has increased, with the borrowing size growing each year, leading to a significant domestic debt.
The latest auction saw a decrease in investor bids to Rs2.6 trillion, down from Rs2.7 trillion at the previous auction held on October 16, 2026.
The first quarter of the fiscal year has already passed without fresh borrowing from the private sector, which had borrowed Rs1.4 trillion in FY26 and Rs1 trillion in FY25.
The six-month treasury bills noted a decline of 6 basis points to 12.39 per cent from 12.45 per cent in the previous auction, still 89 basis points higher than the policy rate.
The State Bank kept the return on T-bills almost 99 basis points higher than the interest rate at the previous auction and maintained this level in the current auction.
