BANKING & FINANCE - May 10, 1994

T-Bill Rates Hit 2 1/2-Year High: The Treasury Department sold $12.1 billion of new three-month bills at an average discount rate of 4.32%, up from 4% last week. Another $12 billion of new six-month bills was sold at an average discount rate of 4.81%, up from 4.41%. The three-month bill rate was the highest since they sold for 4.39% on Dec. 2, 1991. The six-month bill rate was the highest since they averaged 5.04% on Oct. 28, 1991. The new discount rates understate the actual return to investors: 4.43% for three-month bills, with a $10,000 bill selling for $9,890.80, and 5% for a six-month bill selling for $9,756.80. The discount rate reflects the price discount received when government securities are purchased at less than face value.

T-Bill Auction

3-month: 4.32%

6-month: 4.81%