TREASURY BILLS INTEREST RATES DECLINING

Government’s appetite to local borrowing which has fueled higher interests rates in treasury bills has attracted more people to invest in the document.
Recent money market reports have indicated that interest rates for the paper have been well above 20%, a rate which is considered one of the highest in COMESA region.
However, the latest weekly update from NICO Asset Managers observed that the high interests have continued to woo investor’s interest thereby creating a situation where rejection rate is increasing.
For instance, during the Treasury bill auction held last Tuesday, on February 25th 2014, authorities raised the maximum of 8billion kwacha with a surplus supply.
“Authorities raised 8billion kwacha against an announced amount of 8 billion kwacha.
“Total applications stood at 10.3 billion kwacha representing a 22.5% rejection rate and an over subscription of 29%.” Reads part of the report.
Meanwhile, the oversupply is pulling interest rates of the treasury bills –with all three categories registering a drop from that day.
The one that matures in 91 days decreased to 15.68% from 16.46%, the 182rate decreased to 17.15% from 18.00% and the 364days rate to 19.19% from 20.15%.
Economists have predicted that government may continue borrowing as it seems the pulling out of donor support disturbed the smooth running of government.