High inflation rates affecting yields on T-bills – Report

A report by Databank Research noted that investors want higher yields on treasury bills as inflation continues to rise.

The interest rates on Treasury bills are currently high but lower than the current inflation rate. This means that despite the high rates, the yields are lower, posing a high risk to investments.

Inflation currently stands at 37.20% while interest rates for the 91-day and 182-day treasury bill stands at 30% or 31%.

“Headline inflation came in at 37.20%, fueled by housing and utilities, household furnishings, and transport. We expect investors to continue demanding higher yields to compensate for the rising inflation,” the report is quoted by myjoyonline.com.

The report also noted that despite the risks, investors’ interest in t-bills is maintained “for re-pricing benefits while focusing on the near to medium-term maturities in the secondary market.”

However, the government could not meet its T-Bill auction target in the second week of October.

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The government is expected to raise 1.44 billion from the 91-day to 182-day bills to refinance the upcoming T-bill maturities of 1.44 billion.