- Government Rejects GH¢873.94 million in Treasury Bids
Ghana’s latest Treasury bill auction has delivered a mixed signal for public financing: investors offered more money than the Government sought, but the Treasury declined enough bids to finish GH¢405.34 million below its target, even as yields eased across every maturity.
Results released by the Bank of Ghana show that investors tendered GH¢4.27 billion for the 91-day, 182-day and 364-day bills at the October 23 auction, against a target of GH¢3.80 billion. The Treasury accepted GH¢3.39 billion, equivalent to 89.33 per cent of the target and 79.52 per cent of all bids received.
On the surface, demand covered the target by 1.12 times. Yet the Government rejected GH¢873.94 million of submitted bids, suggesting that borrowing volume was subordinated to pricing discipline. The auction therefore missed its funding objective not because investors supplied insufficient cash in aggregate, but because a substantial portion was offered at rates the issuer was unwilling to accept.
That interpretation is reinforced by the bid ranges. Investors sought discount rates as high as 7.10 per cent on the 91-day bill, 8.15 per cent on the 182-day bill and 11.51 per cent on the 364-day instrument. The highest rates allotted in full were considerably lower at 4.65 per cent, 6.15 per cent and 8.89 per cent respectively.
The Government’s willingness to leave money on the table appears to have protected the downward trajectory of borrowing costs. The annualised interest rate on the 91-day bill slipped by one basis point to 4.61 per cent from 4.62 per cent at the previous auction. The 182-day yield declined by 2.25 basis points to 6.29 per cent, while the 364-day yield fell by 3.96 basis points to 9.67 per cent.
The Treasury secured lower rates even while accepting less than targeted, signalling resistance to investor attempts to extract higher returns. For fiscal managers, maintaining that discipline can reduce future interest expenditure and protect the credibility of the domestic debt strategy. For investors, however, it also means that liquidity seeking Government paper may not be accepted at any price.
Demand nonetheless weakened materially from the preceding week. Total bids declined by GH¢906.50 million, or 17.52 per cent, from GH¢5.17 billion at the October 16 auction. The amount accepted decreased by GH¢89.73 million, or 2.58 per cent, from GH¢3.48 billion.
While overall bidding contracted sharply, accepted borrowing remained comparatively stable because the previous auction had also involved substantial rejection. On October 16, the Government accepted only 67.32 per cent of GH¢5.17 billion tendered and raised 69.38 per cent of its GH¢5.02 billion target. This week’s acceptance ratio improved, although the absolute funding target was lower.
The strongest demand remained concentrated at the shortest end of the curve. Investors submitted GH¢2.86 billion for the 91-day bill, representing 67.02 per cent of total tenders. The Treasury accepted GH¢2.55 billion, or 75.21 per cent of total issuance. The tenor recorded an acceptance rate of 89.23 per cent.
By comparison, bids for the 182-day bill amounted to GH¢533.28 million, of which GH¢420.66 million was accepted. The instrument accounted for 12.50 per cent of bids and 12.40 per cent of accepted funds, with an acceptance rate of 78.88 per cent.
The one-year bill attracted GH¢873.69 million, but only GH¢420.24 million was taken. Its acceptance rate of 48.10 per cent was the lowest among the three instruments, although it represented 20.48 per cent of demand. Nearly GH¢453.45 million in one-year bids was rejected, more than half the total amount declined across the auction.
This pattern exposes the central tension. Investors continue to favour instruments that return cash quickly, while the Government would benefit from extending maturities and reducing frequent refinancing. Heavy dependence on 91-day bills may lower the immediate yield, but it increases rollover exposure because the debt must be refinanced four times within a year if the principal is not retired.
Lower rates are positive for debt-service costs, yet a healthy market requires more than cheap three-month funding. It requires confidence strong enough for investors to commit capital for longer periods without demanding prohibitive premiums. The gap between the 91-day and 364-day yields shows that duration still carries a meaningful price.
The next auction will test whether this week’s decline in demand was temporary or the beginning of a tighter liquidity phase. The Government has set a substantially lower target of GH¢2.45 billion for tender 2031, down GH¢1.35 billion, or 35.57 per cent, from the latest target.
That reduction could make the next offer easier to cover and give the Treasury greater leverage over rates. It may also reflect lower immediate refinancing needs or a deliberate effort to avoid absorbing excessive liquidity from the banking system. Without details on maturities, however, the target alone cannot establish whether the Government will record a net repayment or additional borrowing position.
For banks and institutional investors, the auction confirms that Government securities remain a liquid destination for funds, but allocation risk is rising when bids exceed the Treasury’s preferred pricing. Investors seeking certainty may need to submit more competitive rates, reinforcing downward pressure on yields if liquidity remains ample.
For the Government, the results represent disciplined but incomplete financing. Rejecting expensive bids protects borrowing costs; repeatedly missing targets could create cash-management pressure if revenue collection or alternative financing underperforms. The sustainability of the approach will therefore depend on the relationship between auction targets, maturing obligations and fiscal cash flows.
The latest auction is consequently neither a straightforward failure nor an unqualified success. Ghana raised GH¢3.39 billion at slightly lower yields and improved its acceptance relative to its target compared with the previous week. But demand fell, the target was missed and three-quarters of accepted funds remained locked in the shortest maturity.
Appetite for Government paper persists, but it remains price-sensitive and short-term. The message from the Treasury is equally firm: it will sacrifice some funding volume rather than validate the highest demanded yields. Whether that balance can hold will be determined by liquidity, fiscal execution and the Government’s ability to persuade investors that Ghana’s improving macroeconomic story justifies commitments beyond 91 days.
