Economy
Government Readies Long-Term Bonds as T-Bills Pay Half Inflation
Addis Fortune · 4 hours ago · Read the Full Story on Addis Fortune
AI SUMMARY
The federal government is preparing a framework for 10- and 15-year bonds and over-the-counter trading as Treasury bill yields continue to lag far behind the national inflation rate.
- The federal government increased its Treasury bill offer to 23.39 billion Br on October 14, up from 11.94 billion Br two weeks earlier.
- Six-month and one-year bills made up 86.4pc of the planned issuance in the October 14 tender.
- A framework covering 10- and 15-year government bonds and over-the-counter trading has passed management review and awaits approval.
- Treasury bill yields averaged 5.36pc on September 16, with the one-year bill yielding 7.6pc.
- Current T-bill yields fall far below the 16pc policy rate and the 14.9pc inflation rate recorded in September.
- Investment professionals warn that credible, market-based interest rates and a yield curve must be established before over-the-counter trading can succeed.
- The International Monetary Fund expected a new bond and Treasury bill directive by the end of October but has not confirmed its timetable.
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