Government borrows GH¢17.22bn in June, marking 9.55% increase from previous month
In a marked uptick, the Government borrowed GH¢17.22 billion from the treasury market in June 2024, representing a 9.55% increase from the previous month.
This borrowing spree, driven by pressing refinancing needs, saw GH¢14.75 billion allocated to repaying maturing treasury bills.
Consequently, 14.34% of the total funds—approximately GH¢2.47 billion—were earmarked as fresh capital for government use.
Despite this heightened borrowing activity, yields on treasury bills continued their gradual descent. The 91-day and 182-day bills saw their yields decline by 23 basis points and 15 basis points, settling at 24.87% and 27.79%, respectively.
Similarly, the 364-day bill yield dropped by 16 basis points to 27.79%.
Analysts Forecast Potential Stabilization in Yields
Market analysts are sounding a note of caution as they warn that the ongoing strong refinancing pressures, combined with the higher yields on the Bank of Ghana’s Open Market Operations (OMO) bills, could potentially curb further yield declines in the coming month.
This dynamic poses a challenge for the government’s fiscal strategy, as it seeks to balance borrowing costs against market conditions.
Investor Overfunding in Latest Auction
In a testament to robust investor confidence, the government’s recent money market auction saw bids totaling GH¢3 billion, significantly exceeding the treasury’s target.
All bids were accepted, enabling the government to cover maturities valued at GH¢2.12 billion.
Despite this strong demand, yields remained largely unchanged, with the 91-day and 182-day bills holding steady at 24.87% and 26.80%, respectively, while the 364-day bill persisted at 27.79%.
The government’s increased reliance on treasury markets underscores its ongoing fiscal challenges. While the gradual decline in yields offers a modest relief in borrowing costs, the looming threat of refinancing pressures and competitive OMO bill yields suggests a complex road ahead.
