Gov’t faces difficult refinancing options in repaying maturing T-bills
Investment firm, Databank asserts government faces complicated refinancing options in repaying Treasury bills that will mature on October 2022.
According to the Investment firm’s Weekly Fixed Income Update, a refinancing offer on October 3, 2022, may not get much traction due to the expected domestic debt restructuring.
Databank pointed out that the government will likely supplement any refinancing offer with support from the Bank of Ghana to get more favourable refinancing options.
“Last week, Fitch Ratings downgraded Ghana’s Issuer Default Rating from ‘CCC’ to ‘CC’. They cited possible debt restructuring, high debt service, and constrained financing as reasons for the recent downgrade. This is expected to complicate the refinancing options of the Treasury on the maturing paper on October 3, 2022 as pricing for a refinancing offer will likely be unfavourable”.
The government is expected to offer GHS 905 million across the 91-day to 182-day bills to refinance total maturities worth GHS 786.6 million.
The Ghanaian Treasury fell short of its auction target during last week’s (September 23, 2022) T-bill offer for the first time in 15 weeks.
The shortfall in uptake was mainly attributed to subdued bids, with total bids submitted constituting 89.59% of the auction target.
The weighted average yields of T-bills currently stand at 30.18% for the 91-day, 31.34% for the 182-day and 30.47% for the 364-day tenors.
Meanwhile, on the bond market, investors will maintain interest in near-term maturities in the secondary market.
“We expect investors to focus on T-bills in the primary market. Investors may also be on the lookout for a bond offering to refinance the maturing paper on October 3, 22. We expect investors to maintain interest in near-term maturities in the secondary market”.
