- Gov’t Accepts GH¢4.88bn of GH¢11.28bn T-Bill Bids as 364-Day Demand Is Heavily Rejected
Ghana accepted only GH¢4.88 billion from GH¢11.28 billion in Treasury bill bids at its latest auction, rejecting more than half of the amount offered by investors even as demand remained almost twice the government’s funding target. The results point to a more selective borrowing strategy, particularly at the longer end of the Treasury bill curve, where almost all bids submitted for the 364-day instrument were rejected.
The Bank of Ghana’s auction results for Tender 2020, held on August 14 for securities to be issued on August 17, show that investors tendered GH¢5.07 billion for the 91-day bill, GH¢1.28 billion for the 182-day instrument and GH¢4.93 billion for the 364-day bill. Government accepted GH¢4.07 billion, GH¢526.44 million and GH¢289.70 million, respectively, bringing total accepted bids to GH¢4.88 billion against a target of GH¢5.99 billion.
Although investor bids exceeded the auction target by about 88.22%, government accepted only 43.28% of the GH¢11.28 billion offered, leaving sales about 18.55% below target. The scale of the rejection is particularly notable because it occurred despite substantial liquidity being presented to government, suggesting that the authorities were unwilling to accept bids at rates they considered inconsistent with their current debt-management objectives.
The sharpest rejection occurred in the 364-day bill, where investors submitted GH¢4.93 billion but government accepted only GH¢289.70 million, equivalent to just 5.87% of bids for that tenor. By comparison, government accepted about 80.24% of the GH¢5.07 billion tendered for the 91-day bill and roughly 41.08% of the GH¢1.28 billion submitted for the six-month instrument.
That allocation left the shortest-dated instrument overwhelmingly dominant, with the 91-day bill accounting for 83.28% of total securities sold during the auction. The 182-day bill represented 10.78%, while the one-year instrument contributed only 5.93%, reinforcing the government’s concentration of accepted borrowing at the short end despite substantial investor appetite for longer Treasury exposure.
Pricing also reveals the boundary government was prepared to defend. Bids for the 91-day bill ranged from 5.09% to 7.00% on a discount-rate basis, but rates allotted in full extended only from 5.09% to 5.45%, producing a weighted average discount rate of 5.39% and an equivalent interest rate of 5.47%.
For the 182-day bill, investors sought discount rates between 6.90% and 8.63%, while bids allotted in full were limited to a maximum of 7.1360%. The weighted average discount rate settled at 7.02%, corresponding to an interest rate of 7.27%, indicating that government again rejected bids above the level it was prepared to pay.
The stance was even clearer on the 364-day bill, where bids ranged between 11.11% and 12.50%, but only bids at a discount rate of 11.11% were allotted in full. The resulting weighted average interest rate was 12.50%, suggesting that investors demanding pricing outside the government’s preferred level were largely excluded from the auction.
The latest outcome represents a substantial reduction in actual borrowing compared with the previous auction. Tender 2019, held on August 7, attracted GH¢11.64 billion in bids and resulted in GH¢9.42 billion being sold, meaning accepted borrowing in the latest auction fell by approximately 48.17%, even though the amount tendered declined by only 3.07%.
That divergence is important because it shows that the fall in borrowing was not driven primarily by weaker investor demand. Investors continued to submit more than GH¢11.00 billion, but the government chose to take considerably less of the money available, strengthening the interpretation that pricing discipline rather than liquidity scarcity determined the outcome.
For public debt management, rejecting expensive bids can help contain interest costs, particularly where government has sufficient cash buffers or alternative financing to avoid accepting every offer presented at auction. The trade-off is that persistent concentration at the short end increases refinancing requirements, since three-month securities must be rolled over much more frequently than instruments carrying longer maturities.
The result also provides an indication of the increasingly important negotiation taking place between investors and government over the appropriate level of yields. Investors seeking to lock in longer-dated rates appear willing to submit substantial volumes, while government is demonstrating that strong demand does not automatically translate into full acceptance where pricing exceeds its preferred range.
The next Treasury bill auction will target GH¢5.43 billion across the 91-, 182- and 364-day securities, below the GH¢5.99 billion target for the latest tender. How aggressively government accepts those bids will provide another signal of whether the latest rejection represents a temporary liquidity-management decision or a more deliberate attempt to force borrowing costs lower.
For now, the August 14 auction sends a clear message to the market: abundant demand does not mean government will borrow at any price. With investors offering GH¢11.28 billion but only GH¢4.88 billion accepted, the contest over yields has shifted increasingly from whether Ghana can raise domestic financing to how much it is prepared to pay for it.
