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. Last Updated: 07/27/2016

T-Bill Yields Climb Back After Dip

Yields on government treasury bills, or GKOs, climbed back to 56 percent in Wednesday auctions after dipping below 50 percent for the first time a week earlier.

Brokers attributed the rise, which effectively increases government borrowing costs, to a Central Bank decision to reduce the cap on yields for non-residents to 16 percent from 19 percent. Rules governing participation by foreigners in the T-bill market have always kept their yields much lower than the once sky-high returns available to Russian investors.

GKO yields dipped to 49.6 percent at auction last Wednesday as Russian markets rallied strongly on news of favorable international debt ratings. At one point in the run-up to presidential elections last June, yields topped 200 percent. Central Bank Deputy Chairman Andrey Kozlov has predicted T-bill yields could fall between 30 and 40 percent next year.

"Foreign money rushed in last week for the last opportunity to buy 19 percent paper, but at 16 percent that demand dropped off," said a trader with ING Barings in New York.