Investors Shift to BoG Bills Over Decline in Treasury Bill Yields  

Investors Shift to BoG Bills Over Decline in Treasury Bill Yields  

Investors are increasingly shifting their focus from Treasury bills to Bank of Ghana (BoG) bills, which are offering returns of approximately 28%. This trend is driven by a sharp decline in Treasury bill yields, leading to a notable undersubscription in the government’s recent auction.

According to IC Insights, the 100-basis-point increase in the policy rate is expected to sustain demand for Open Market Operations (OMO) securities, further draining interest in Treasury bills. “However, the ongoing squeeze on public spending will ease the financing requirement and avert an upward reversal in T-bill rates, barring any foreign exchange shocks,” the research firm noted.

At the last auction, the government rejected GH¢2.37 billion worth of bids that exceeded its yield corridor, accepting only GH¢1.69 billion out of a targeted GH¢4.39 billion. This partial uptake covered just 40% of the GH¢4.22 billion in maturing bills, highlighting a tightening supply in the market.

Consequently, Treasury bill yields declined week-on-week by 6 basis points, 23 basis points, and 1 basis point for the 91-day, 182-day, and 364-day tenors, settling at 15.65%, 16.50%, and 18.84%, respectively.

The significant bid rejections indicate a misalignment between investor yield expectations and the government’s yield targets, especially as plans to reopen the bond market gain momentum.

“In our view, the gap between the Monetary Policy Rate and money market yields signals a policy rate disconnect—a short-term divergence intended to steer investor interest toward limited alternative assets. However, if such rejections persist, they could gradually deplete the Treasury’s liquidity buffers, further tightening liquidity in the money market,” Databank Research warned.

Looking ahead, the government aims to raise GH¢6.68 billion this week through the issuance of 91-day, 182-day, and 364-day bills to refinance GH¢6.43 billion in maturing obligations.