T
he State Bank of Pakistan (SBP) has announced its plan to conduct auctions for the buyback of securities, aimed at managing public debt and improving the fiscal position. According to analysts, this adjustment to the current buyback program will allow the government to reduce its debt burden, lower interest payments, and improve its debt profile. Instead of raising funds, the government will now be able to repurchase bonds and treasury bills from the market.
By exchanging illiquid or outdated instruments for more liquid ones, the buyback plan is expected to enhance liquidity in the debt markets. SBP will conduct the buyback auctions for Market Treasury Bills (MTBs) on behalf of the Government of Pakistan, in accordance with the Market Treasury Bills (MTBs) Rules of 1998, which allow the government to repurchase MTBs.
The details of these buyback auctions—such as the target amount, auction schedule, and auction results—will be announced on platforms like Refinitiv, Bloomberg, SBPK pages, and the SBP website. The buyback price will be determined through a competitive auction process, with all Primary Dealers eligible to submit competitive bids. Non-competitive bids may also be submitted under existing guidelines.
Participants will provide the bid price (up to four decimal places) per Rs. 100 face value, along with the amount of securities, using the Bloomberg Auction Module. On the settlement date, the bought-back securities will be debited from successful bidders’ SGLA accounts, and their current accounts will be credited with the accepted price. All other auction procedures will follow the existing rules outlined in previous circulars.
This move follows a similar buyback program initiated in October 2021. By June 2024, MTBs accounted for 27.7 percent of the Federal Government’s outstanding securities, while PIBs made up 57.8 percent. Additionally, 85.8 percent of MTBs and PIBs were classified as Available for Sale, 4.3 percent as Held for Trading, and 9.8 percent as Held to Maturity.