Investor interest in short term debt market remains steady despite undersubscribed GHS 2.7bn auction
The Bank of Ghana’s Treasury bills auction, worth GH¢2,732.00 million, fell slightly short of expectations, being undersubscribed by 0.15%. Despite this, the auction concluded with the acceptance of T-bills totaling GH¢2,015.27 million for the 91-Day bills and GH¢712.75 million for the 182-Day bills.
Remarkably, the accepted bids equaled the tendered bids, resulting in a 100% acceptance rate. This outcome signals a balanced demand and supply scenario for the Treasury bills. Investors showed interest in both the 91-Day and 182-Day T-bills, which contributed to the overall acceptance of bids.
The 91-Day T-Bills exhibited a gain of 13 basis points (bps) in their yield, settling at 20.56%. This increase indicates a decrease in the effective interest rate for the instrument, which could be attributed to the relative attractiveness of the shorter-term maturity. Similarly, the 182-Day T-Bills experienced a significant gain of 40 bps in yield, settling at 23.36%.
Looking ahead, the Bank of Ghana has set a target of GH¢3,431.00 million for the upcoming auction, Tender #1852. This target encompasses the 91, 182, and 364-Day T-Bills. It will be interesting to observe market participants’ response to this increased offering and whether it will lead to a higher subscription rate compared to the previous auction.
The results of the Treasury bills auction reflect the prevailing market sentiment and the attractiveness of these short-term government securities. The gains in yields indicate that investors are demanding higher returns for their investments, potentially reflecting expectations of inflationary pressures or perceived risks in the market.
As the Bank of Ghana continues its efforts to manage liquidity and provide financing options for the government, market participants will closely monitor the outcomes of future auctions. These auctions serve as a barometer for investor confidence and can provide insights into the overall state of the economy. Factors such as government fiscal policies, monetary policy decisions, and external market conditions will continue to influence the demand and pricing of Treasury bills in the coming months.
Overall, while the recent Treasury bills auction was slightly undersubscribed, the acceptance of bids and the gains in yields demonstrate ongoing investor interest in Ghana’s debt market. As the target for the next auction is set higher, market participants will eagerly watch for any shifts in investor sentiment and the subsequent impact on yields and subscription rates.
