Rates for government securities, Treasury Bills (T-Bills) have rose by 25 percent in a month—between November 5 and December 3—to 34 percent from 27 percent across all the three tenors, available data has shown.
Data provided by Nico Asset Managers indicate that the rates shot up in the period regardless that there was no significant change in the amount raised.
According to Nico Asset Managers, during a T-Bills auction held on December 3, authorities raised K1.5 billion against an announced K2 billion.
The business advisory firm further said that T-Bill rate for the 91 days tenor increased to 31.81 percent from 28.03 percent, 182 days tenor yield increased to 33.49 percent from 30.98 percent while the 364 days tenor rate increased to 36.52 percent from 34.43 percent.
The data also indicates that during an auction held on November 5, the 91 days tenor rate stood at 25 percent, the 182 days at 26.5 percent while the 364 days yield was at 30 percent.
In March this year T-Bills rose to over 43 percent due to huge government domestic borrowing. Experts and analysts linked the rise in domestic borrowing to a liquidity crunch that commercial banks experienced and to an increase in lending rates which rose to over 40 percent. Interest rates have so far declined due to improved market liquidity.
Experts have cautioned that government may resort to domestic borrowing to bridge the fiscal gap in the wake of the November 7 decision by the Common Approach to Budget Support (Cabs) to withhold $150 million (about K60 billion), due to financial mismanagement. Government has since quashed the fears.
The analysts warned that domestic borrowing may crowdout the private sector and prompt a rise in interest rates.
