Rising T-bill rates raise cost of borrowing for companies

Treasury Bill

Analysts expect continued upward pressure on the rates as long as inflation remains high.

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Companies with loan facilities pegged on Treasury bills are facing higher financing costs as interest rates on the securities continue to go up in weekly auctions.

Banks often price short- and medium-term loans to companies at the prevailing Treasury bill rate plus a premium. They do so to protect themselves from losing their margins when the cost of funds goes up as they compete with the Treasury for private sector deposits.

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