The Finance Ministry has reversed an earlier decision not to hold its monthly auction of a six-month Treasury Bill, after appeals from brokers to reconsider.

The auction will proceed on Wednesday, February 27, the ministry said Friday, days after the Jamaica Securities Dealers Association met with Senator Don Wehby to make their case.

The decision to proceed followed an undertaking by Wehby, a Minister without Portfolio, to consult with the Finance Ministry's Debt Management Unit.

Finance had suspended the auction and announced that it would have been paying returns on the basis of the January T-bill yield of 13.34 per cent, to keep its debt-servicing costs in check for the quarter.

The market, however, had projected higher yields from the upcoming auction - a forecast based on the central bank hike in signal rates - and would have to forego several billion dollars of returns were the old interest rate to stand.

Rates on open market instruments were adjusted by the Bank of Jamaica in February bringing its full suite of debt instruments within the price range of 13.5 to 15 per cent.

Brokers were expecting to capitalise on this movement with bigger returns on the next round of interest payments that become due on $54 billion of issued variable rate government paper, over the next four weeks.

The Finance Ministry says it will publish a revised schedule of 'new debt issues' for February. The old schedule included a 90-day T-bill and a variable rate bond.

sabrina.gordon@gleanerjm.com