Treasury bills are short term government debt instruments with standard maturities placed at 3 months, 6 months and, in some cases, 1 year

The National Bank of Rwanda (BNR) will issue to the public Treasury Bills (TBs) worth Rfw3 billion today, an official has said.

Philemon Safari, Head of Money and Financial Markets in BNR said, the 13 weeks renewable TBs will be open to commercial banks, individual investors and non-banking enterprises.

Treasury bills are short term government debt instruments with standard maturities placed at 3 months, 6 months and, in some cases, 1 year. They are usually issued at a discount and are redeemed at their full face value at maturity.

Safari said, "The interest rates will be determined by the market.” He however predicted  interest rates to be higher than 7 percent.

According to BNR, the competitive bids will be considered according to the lowest rate offered and will involve a number of bonds equivalent to a multiple integer of Rfw50m. The interger must indicate the amounts and corresponding discount rates.

The non-competitive bids the bank said will be served at the weighted average rate resulting from the competitive bids and must involve a number of bonds equivalent to a multiple integer of Rfw100,000.

A statement by BNR said that opening of the bids will start at 10 am while the auction results will be communicated to the bidders at 3 pm.

"Settlement will take place on Friday, (28th of November 2008) by debiting the successful bidders’ account or, if need be, via the intermediary banks through which they will have specified,” the statement said.

"The repayments will be effected the next working day following the maturity date on Friday, February 27, 2009 by crediting the corresponding accounts,” the statement adds.

Robert Mathu, Executive Director Capital Market Advisory Council said Treasury bills also influence investors’ decisions at stock market by comparing interest rates.

"Treasury bills act as a benchmark to bond pricing,” he said.

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