* Some Feb-March T-bill rates rise to highest since October
* U.S. borrowing limit seen exhausted by early March
NEW YORK, Jan 24 (Reuters) - U.S. Treasury bill rates jumped on Friday on concerns that Washington won't raise the government's $16.7 trillion statutory borrowing limit in time before it is expected to be exhausted by early March.
After their previous showdown in October, Congress and the White House suspended the borrowing cap until Feb. 7. If the debt ceiling isn't raised by then, Treasury will be able to juggle money between government accounts for a few weeks to keep just under the new limit.
On Friday, Patty Murray, a top Democrat senator, said her party will not negotiate with Republicans to raise the debt ceiling in exchange for concessions.
As risk grew that repayment on T-bill issues due in late February to mid-March might be delayed without a debt deal, investors reduced their holdings of these issues. This catapulted the interest rates on these ultra-short-dated debt to their highest since October.
About $196 billion in T-bill issues are due to mature in late February to mid-March, together with nearly $100 billion coupon-bearing debt, according to TD Securities interest rate strategist Gennadiy Goldberg.
"Absent a deal on the debt ceiling we expect T-bills maturing in late February and early March to move higher in yield as we approach the ceiling date," Citi analyst Andrew Hollenhorst wrote in a research note published on Friday.
Hollenhorst estimated the government will unlikely have enough cash on hand after March 3 to meet its debt obligations and payments on Social Security and other social programs.
The interest rate on T-bills due March 6 traded as high as 0.10 percent before moving down to 0.09 percent. It ended at 0.03 percent on Thursday.
Back in October, some T-bill rates had surged above 0.50 percent, a level not seen since during the global credit crisis more than five years ago.
Rates on T-bills that mature after mid-March, while higher on the day, were lower than those on T-bills due in late February and mid-March, as traders anticipated any delay in repayments will be fairly brief, analysts said.
The rate on Treasury bills due March 30 for example rose to 0.065 percent, up nearly 4 basis point from late on Thursday.