One-year treasury bills rate at December 24 auction may go down

KARACHI (December 24 2002) : The cut-off yield on one year Treasury Bills would go down by at least 230 basis points at the auction on Tuesday, the first sale since the cut in TBs discount rate.

The State Bank of Pakistan (SBP) is to sell Rs 15 billion worth of three-month and one-year treasury bills on Tuesday which would mature on March 20, 2003 and Dec 26, 2003, respectively.

It would be the first auction of three-month and one-year treasury bills after cut in discount rate by 1.5 percent to 7.5 percent.

Analysts said the central bank switched auction of three-month and one-year treasury bills to six-month treasury bills to set a new six-month yield level before cutting the export refinance rate.

The SBP normally uses the average of previous six-month treasury bill cut-off yield to set the rate.

During the last auction, the central bank had rejected the offers made by banks to lift three-month treasury bills but sold one-year treasury bills worth Rs 37.43 billion, and the cut-off yield stood at 6.91 percent.

Analysts expect that following the cut in the discount rate, the one-year paper is trading at 4.10 percent to 4.30 percent, which means a possible rate cut may be expected in one-year treasury bills auction on Tuesday.

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