Oversubscription of treasury bills at high interest rates does not make sense – Joe Jackson

The Director of Business Operations at Dalex Finance, Joe Jackson, has bemoaned the high-interest rates on treasury bills in recent times.

According to him, it does not make economic sense for the government to be borrowing at such high rates while investors also lend at such high rates.

He said he is even more perplexed at the fact that the bids get oversubscribed.

“How can we after taking such bold steps to reduce domestic debt to bring our debt levels to sustainable levels be now piling up short-term debt- 91 Day Bill at 27% and 182 Day Bill at 28 % and 364 at 31%. This does not just make sense especially when the bids are oversubscribed,” he quizzed.

Joe Jackson questioned why the government could not reject the bids and asked investors to subscribe at lower rates since the appetite for treasury bills is encouraging.

He cautioned the government that if the trend continued, the government may be plunged into another debt crisis.

“Why can’t the government reject the bids and ask investors to resubmit at lower bids like it did in March? We should be querying the government for borrowing at these high rates and query the investors for also lending at these higher rates because this will lead to the same problems that led us to a debt exchange programme,” he warned.

In the past three weeks, the government has recorded oversubscriptions on treasury bills despite the high-interest rates.

Interest rates have averaged between 27% and 31%, which will make maturities expensive for the government to fulfill.