Doubt rises on Treasury capacity to pay USD120 billion on US securities
Financial markets had reflected investor doubt about the US Treasury having the capacity to pay USD120 billion of Treasury bills. In an earlier statement, US Treasury Secretary Jacob Lew had said the government would exhaust all means to be able to pay its investors. Rates on Treasury bills had matured on the same day Lew made his announcement.
According to pricing data from bond market news segment Bloomberg Bond Trader, Treasury bill rates climbed from 12 basis points to 0.32% or 32 basis points this week.
Ferguson Wellman Capital Management Inc chief of fixed income unit Marc Fovinci said about the rates, "That is how fear manifests itself. The market is discounting a day, or several days delay in payments."
Lew had told the US Congress that the Treasury would be exhausting measures not later than October 17 to avoid a debt ceiling breach. Lew also said the department was equipped witrh some USD30 billion to pay obligations in case Congress had not reached an agreement to lift the ceiling cap.