Short-term rates up

Press, 18 December 1985, Page 37

Short-term rates up

PA Wellington Dealers bid only S72M for the SIOOM offered at yesterday’s weekly Treasury bill tender, and short-term interest rates firmed strongly as a result. All of yesterday’s bids were successful and dealers, who thus set their own rates, were able to buy bills at rates of up to 20.83 per cent compared with a top successful tender bid last week of 18.43 per cent. The average paid for 70day bills was 19.021 per cent, compared with 17.622 per cent at last week’s tender, and the average for 35-day bills was 20.024 per cent, compared with 18.14 per cent for 28-day bills last week. Both maturities were under-subscribed. Earlier in the day the Reserve Bank took the unusual step of entering the open-money market on a tender day with an offer to sell SIOOM of short-dated Treasury bills. Again, it was unsuccessful.

The bank sold only SSM worth of 14-day bills, all at 17.69 per cent, and rejected SISBM worth of other bids. The bank later declined to comment on the rejection, but dealers said the move had plainly been made be-

cause the bids were considered to be too high.

Dealers said the successful bids of 17.69 per cent were above Monday’s open market yield of 17 per cent and that the bank was clearly not ready to go much higher in a non-tender situation. The difference between this open-market operation and the usual weekly tender was that the successful bidders at the tender have five working days in which

to settle, whereas the bills offered yesterday morning were for same-day settlement.

Bills at 35 days: Offered, SSOM; bid, $3l; sold, $3l; successful yields, 17.49 to 20.83 per cent; weighted average, 20.024; previous tender, 18.14 for 28-day bills.

Bills at 70 days: Offered, SSOM; bid, $4l; sold, $4l; successful yields, 18 to 20.5 per cent; weighted average, 19.021; previous tender, 17.622 for 77-day bills.