Government’s Treasury Bill Auction Falls Short for Third Consecutive Week Amid Investor Caution

Despite the shortfall, the government accepted only GH¢1.69 billion of the bids, rejecting approximately GH¢2.36 billion. This means the government secured just about 39% of its intended borrowing for the period.

Breakdown of Bids:• 91-day T-bill: GH¢3.38 billion tendered; GH¢1.44 billion accepted.• 182-day T-bill: GH¢501.17 million tendered; GH¢81.09 million accepted.• 364-day T-bill: GH¢176.26 million tendered; GH¢161.26 million accepted.

Interest rates on these instruments continued their downward trend:• 91-day T-bill: Yield declined by 7 basis points to 15.64%.• 182-day T-bill: Yield decreased by 23 basis points to 16.50%.• 364-day T-bill: Yield dipped by 1 basis point to 18.83%. 

The consistent undersubscription and declining yields suggest a cooling interest among investors in short-term government securities. Analysts attribute this trend to several factors, including the government’s deliberate strategy to lower borrowing costs by reducing interest rates, which may have inadvertently dampened investor enthusiasm. Additionally, the recent 100 basis points hike in the Monetary Policy Rate to 28% by the Bank of Ghana’s Monetary Policy Committee (MPC) reflects efforts to address inflationary pressures but may also influence investor behavior. 

Looking ahead, the government plans to raise GH¢6.68 billion in the next T-bill auction. Market watchers are keenly observing whether the current trend of undersubscription and yield compression will persist, potentially impacting the government’s short-term borrowing strategy and broader fiscal planning. 

The evolving dynamics in the T-bill market underscore the delicate balance the government must maintain between managing borrowing costs and ensuring sufficient investor participation to meet its financing needs.