Government raises GHS 14.16bn via Treasury Bills in March 2023
In March 2023, the government of [Country X] raised a total of ¢14.16 billion via Treasury bills, underscoring the continued robust demand from investors for the country’s sovereign debt. However, in a bid to reduce the debt burden, yields on the T-bills dropped sharply, with the 91-day yield falling to 18.88% (-17.14% month-on-month), while the 182-day and 364-day bills closed lower at 21.44% (-14.45% month-on-month) and 25.66% (8.80% month-on-month), respectively.
Despite the decline in yields, analysts believe that investor interest in the country’s sovereign debt will remain firm for upcoming issuances in April 2023. However, they caution that some risks persist, and yields are expected to rise due to the policy rate hike.
The government’s borrowing through Treasury bills has become increasingly important in recent years, as the treasury market is presently the only source of borrowing for the government. In 2022, the government raised a total of ¢70.95 billion via T-bills, out of total bids worth ¢72.83 billion. This suggests that the amount the government expects to raise through T-bills in 2023 may exceed that of 2022.
However, borrowing through T-bills can have significant implications for the government’s debt burden, fiscal policy, and monetary policy, as well as for investors’ returns and risk management strategies. For example, in 2022, yields on the money market securities surged significantly due to higher inflation, resulting in the benchmark 91-day yield increasing from 12.51% (December 2021) to 35.36% (December 2022).
As such, the government will need to carefully balance its borrowing needs with its fiscal and monetary policy objectives, while investors will need to carefully assess the risks and returns associated with investing in the country’s sovereign debt. In the context of global economic uncertainty, geopolitical risks, and the ongoing pandemic, the financial landscape remains uncertain, and both the government and investors will need to remain vigilant and adaptable to changing market conditions.
