Govt saves Rs11.5bn in historic T-bills buyback

In a rare move, the government on Monday opted for a buyback of costly treasury bills worth Rs351 billion at a much lower rate, saving over Rs11.5bn in profit. Bankers described it as a smart move by the government to save money. Through the buyback, the government repurchased six- and 12-month papers. These papers were originally sold at rates betw­een 20 and 21 per cent; the government bought them back at 16pc. Banks agreed to sell at this rate as the secondary market was trading at 15.5pc, and returns are expected to fall further with the anticipated drop in inflation and interest rate cuts. “The government would save around Rs11.5bn through the buyback,” said Tahir Abbas, head of research at Arif Habib Limited. He said the government is looking to extend the tenure from three-, six-, and 12-month papers to long-term Pakistan Investment Bonds.