Gov’t’s next T-Bill auction aims to address GHS 1.7bn rollover gap amidst tightening liquidity
Government’s upcoming Treasury bill auction, scheduled for Friday, June 30, 2023, is targeting a total face value of GH¢2.913 billion for the 91-day and 182-day bills. This offering aims to address the rollover obligation of GH¢1.738 billion.
Given the recent uncovered auctions, the Treasury appears to be seeking to close the rollover gap through increased uptake from this auction, resulting in a significantly higher offer target compared to the refinancing obligation for the week.
However, emerging indications of tightening Ghanaian cedi (GHS) liquidity conditions in the interbank market, coupled with an 18 basis points (bps) increase in the interbank interest rate over the past three weeks, may lead to higher T-bill yields at the auction, given the prevailing uncertainties.
Despite these challenges, the Government last week, experienced robust demand for its short-term debt instruments, as evidenced by the recent issuance of 91-day, 182-day, and 364-day Treasury bills, which saw significant oversubscription, surpassing the target by GHS 75 million.
Primary dealers demonstrated strong interest, raising a total of GHS 2,277 million, surpassing the government’s initial target of GHS 2,202 million. This positive response reflects investors’ confidence in Ghana’s fiscal stability and short-term investment opportunities.
The 91-day Treasury bill attracted bids worth GHS 1,861 million, with the government accepting all bids, indicating high demand for this short-term instrument. Similarly, the 182-day Treasury bill received bids worth GHS 304 million, all of which were accepted.
For the 364-day Treasury bill, bids worth GHS 112 million were submitted, and the government accepted all of them. This further highlights investors’ appetite for government debt.
The highest interest rates offered by investors for the Treasury bills were 22.9% for the 91-day, 25.4% for the 182-day, and 29.2% for the 364-day Treasury bills. These rates reflect investors’ return expectations and are influenced by market conditions and risk considerations.
As the government addresses its rollover gap through the upcoming auction, market participants will closely monitor the auction results, particularly in light of tightening liquidity conditions and the potential impact on T-bill yields. The continued demand for Ghana’s short-term debt instruments underscores investor confidence in the country’s fiscal management and attractive investment opportunities in the short-term debt market.
