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UPDATE 1-U.S. sells short-term debt at highest rates since Oct

Richard Leong
Monday, 10 Feb 2014 | 12:44 PM ET

* U.S. sells record amount of 3-month, 6-month bills

* T-bill rates rise on federal debt ceiling jitters

* Treasury to sell $50 bln cash management bills at 1 p.m. EST

NEW YORK, Feb 10 (Reuters) - The U.S. government on Monday sold record amounts of three-month and six-month debt at the highest interest rates on the maturities since October, prompted by worries it will be unable to increase its $16.7 trillion borrowing limit by late February.

In a similar replay four months ago, growing risk that Uncle Sam might delay its payments on its debt obligation drove Treasury bill rates to their highest levels since the global financial crisis.

On Monday, the Treasury Department said it would pay dealers and investors 0.095 percent on $42 billion of its three-month debt due on May 15.

It would pay 0.11 percent on $42 billion of six-month T-bills that mature on Aug. 14.

The amount of three-month bills sold surpassed the prior record of $35 billion, while the amount of six-month debt sold eclipsed the previous record of $31 billion.

The Treasury will sell $50 billion in 72-day cash management bills at 1 p.m. EST (1800 GMT) which traders expected would fetch an interest rate of 0.1000 percent.

Treasury issues cash management bills to raise money for tax refunds and other short-term purposes. This short-term debt has irregular maturity dates.

On Tuesday, it will auction $8 billion in one-month bills . This will be a second consecutive week the government will sell this amount of this T-bill maturity, which is the smallest since April 2008.

The Treasury's juggling of its debt issuance has been part of its attempt to ensure the government pays its bills on time as it approaches its borrowing limit.