* Some Feb-March T-bill rates rise to highest since October
* U.S. borrowing limit seen exhausted by early March
By Richard Leong
NEW YORK, Jan 24 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