T-bills highly
oversubscribed

15-year bills offered at 10.92 percent.

Central bank subsidized 0.42 percent

The Ministry of Finance (MoF) said that demand from banks for subscription of its Treasury bill issue of the second week of December exceeded the offer size by 84 percent.

The issue, which will mature in 2033, is valued at LL1,200 billion ($796 million). Demand from banks reached LL7,427 billion ($4.93 billion).

The T-bills were offered at interest rates that are in line with global and local rates, taking into consideration additional risk because of the country’s failure to form a new Cabinet, the MoF said. The offered interest rate is less than the rate that the Central Bank (BDL) pays to banks on certificates of deposit (CDs), according to MoF.

The T-bills were originally offered at the auction at 10.5 percent, and then the rate was raised to 10.92 percent because the bills mature in 15 years. BDL will bear the difference in interest rates. The Central Bank and MoF agreed earlier this month to finance the State in 2019 at market rates. They decided to raise the interest rate on ten-year treasury bills to 10.5 percent. The yield on 15-year bills was 7.9 percent prior to the agreement. The MoF used to issue T-bills at below-market rates and the difference was shouldered by BDL.

The ministry said that its issue of T-bills for the third week of December is LL1,007 billion ($668 million). It matures in 2028.