Gov’t misses GHS 2.7bn auction target by GHS 5m
In a surprising turn of events, the government’s recent Treasury Bills (T-Bills) auction failed to meet its target of GHS 2,732 million, experiencing an undersubscription of GHS 5 million. This deviation from previous weeks of oversubscription indicates a notable decrease in investor appetite for T-Bills.
The total bids tendered by primary dealers for these short-term debt instruments amounted to GHS 2,727 million, falling short of the intended target. Specifically, bids for the 91-day treasury reached GHS 2,015 million, while bids for the 182-day treasury totaled GHS 712 million.
During the auction, the T-Bills were issued at varying interest rates. The 91-day treasury was issued at an interest rate of 20.5%, while the 182-day treasury carried an interest rate of 23.3%.
Looking ahead, the government has set its sights on raising approximately GHS 3.4 billion in the next week’s auction, targeting the issuance of 91-day, 182-day, and 364-day T-Bills. This ambitious goal will test investor sentiment and the government’s ability to attract sufficient demand for its short-term debt instruments.
The undersubscription in the recent T-Bills auction suggests that investors may be adopting a more cautious approach, possibly due to factors such as market uncertainties or a shift in investment preferences. It will be crucial for the government to closely monitor investor sentiment and adjust its debt issuance strategy accordingly to ensure successful auctions and maintain market confidence.
Furthermore, the government must evaluate the factors contributing to the decreased interest in T-Bills and explore measures to address them. Enhancing the attractiveness of these instruments, through competitive interest rates or other incentives, could help stimulate investor demand and meet the government’s financing requirements.
As the government proceeds with its debt management efforts, transparency and effective communication with investors will play a vital role in fostering trust and maintaining investor confidence. By closely monitoring market dynamics and implementing appropriate strategies, the government can navigate the challenges in the upcoming T-Bills auction and secure the necessary funds to support its fiscal objectives.
