Economy
T-Bill Yields Slide to a Record Low as Banks Return to Lending
Addis Fortune · 3 days ago · Read the Full Story on Addis Fortune
AI SUMMARY
The 28-day Treasury bill yield dropped to 3.1pc on September 2, its lowest level since August 2024, as the removal of credit caps freed banks to return to lending.
- The 28-day Treasury bill cleared at a weighted-average yield of 3.1pc on September 2, the lowest in the Central Bank's series since August 2024.
- Yields fell across every maturity, with 91-day, 182-day, and 364-day bills yielding 4.01pc, 5.14pc, and 7.85pc respectively.
- The bid-to-cover ratio dropped to 1.72 times from 3.6 on August 19 as bidding eased across the auction.
- Awash Capital CEO Andualem Hailu attributed the shift to the Central Bank removing credit caps, freeing liquidity for loans and reducing appetite for government paper.
- Total bids reached 74.18 billion Br with about 43 billion Br accepted, raising the acceptance rate to 57.9pc from 41.4pc in the previous six auctions.
- Pragma Capital CEO Mere'ed Fikireyohannes noted that excess liquidity at the Commercial Bank of Ethiopia and pension funds sustained appetite for bills despite returns falling below inflation.
- The 3.1pc bill yield sits nearly 12 percentage points below the 15.1pc inflation rate, with buyers accepting the gap for safety, liquidity, and regulatory treatment.
- Interbank money markets steadied near 13pc for overnight and seven-day lending following a mid-August squeeze, while the policy rate remains at 16pc.
- Experts have urged the Ministry of Finance to issue two-, five-, and 10-year securities to establish benchmark reference prices beyond short-term maturities.
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