T-bill auction: govt raises Rs685.5bn, 6-month yield 12.39%, still 89 basis points above the 11.5% policy rate

The government raised Rs685.5 billion at Wednesday's treasury bill auction and again accepted returns well above the State Bank's 11.5% policy rate, Dawn reported. The cut-off yield on the 6-month T-bill fell 6 basis points to 12.39%, from 12.45% at the previous auction, which still leaves it 89 basis points (0.89 percentage points) above the policy rate.

The numbers from the auction

Dawn said returns on all tenors were above the policy rate but gave the cut-off only for the 6-month paper. The 6-month yield had jumped 75 basis points, from 11.70% to 12.45%, at the September auction, so this week's small dip is the first easing since then.

Why the gap matters

When the government pays banks more than the policy rate to borrow, the market is betting that rates will not fall soon, and may rise. Banks get a safe 12.4% from lending to the state, so they have less reason to lend to businesses at lower rates. Private sector borrowing was Rs1.4 trillion in FY26, Dawn noted, against Rs1 trillion in FY25.

The next test is the State Bank's monetary policy announcement on 26 October. The 1-year KIBOR, the benchmark most car and home loans in Pakistan are priced on, was 12.74% on 15 October on our KIBOR page, also well above the policy rate. You can follow the SBP policy rate history here.

What it means for you

• Savers: a 6-month T-bill near 12.4% is now better than most bank savings accounts. Individuals can buy T-bills through a bank's investor portfolio account or the SBP's Roshan Digital route if they live abroad. Compare with the current National Savings rates using our National Savings calculator.
• Borrowers: loans linked to KIBOR are unlikely to get cheaper before 26 October. Check what a 1-point move does to your instalment with the car loan calculator or the home loan calculator.
• Inflation: CPI was 10.3% in September, so a 12.39% yield gives a real return of about 2 percentage points.