Investor participation in the Treasury bill market remained relatively strong last week, but the government’s latest auction fell short of its fundraising target after the Treasury rejected a portion of bids at higher interest rates.
According to results released by the Bank of Ghana, investors submitted GH¢4.16 billion in bids across the 91-day, 182-day and 364-day Treasury bill tenors. Of that amount, the Treasury accepted GH¢3.16 billion, against a target of GH¢3.37 billion.
The amount accepted fell GH¢207.73 million short of the target, translating into an under-subscription rate of 6.2%.
The outcome suggests that investor demand was sufficient to cover the government’s financing requirement. However, rather than accept all bids, the Treasury opted to limit its borrowing costs by rejecting bids that carried relatively higher interest rates.
The 364-day bill remained the most attractive instrument on the yield curve, attracting the strongest investor interest with GH¢1.86 billion in bids. The Treasury accepted GH¢1.10 billion of those bids.
The benchmark 91-day bill received GH¢1.69 billion in bids, of which GH¢1.63 billion was accepted. The 182-day bill attracted GH¢618.90 million, with GH¢435.82 million accepted.
The sharp turnaround from the previous week’s 60.2% oversubscription reflects changing market dynamics, with investors increasingly demanding higher returns amid inflation concerns, growing government financing needs and expectations of further monetary policy easing.
Those expectations were reflected in yields, which continued their upward trajectory across all tenors. The yield on the 91-day bill rose to 5.87% from 5.73% a week earlier, while the 182-day bill increased to 7.79% from 7.69%. The 364-day bill also climbed to 12.93% from 12.82%, underscoring investors’ demand for higher compensation, particularly on longer-dated securities.
Looking ahead, the government plans to raise GH¢5.67 billion in the next Treasury bill auction as it seeks to meet its near-term financing requirements.
