Liquidity tightens on interbank market, as government T-Bills sale target falls short again
Liquidity appears to be tightening on the interbank Treasury market, according to analysts sampled by PFM Tax Africa.
This follows fluctuations in Treasury bills auctioning for the past two weeks. The situation had persisted early in the year but eased later on, and has resurfaced again.
According to the latest auctioning of the sale of the short term securities on September 17, 2021, by the Bank of Ghana, government fell short of the target by 18.11%.
Government secured GH¢1.207 billion of the securities, as against a target of GH¢1.474 billion.
The investors decided to patronise the 91-day Treasury Bills, subscribing GH¢878.41 million of the short term securities. GH¢137.25 million worth of the 182-day T-Bills was bought, whilst for the 1-year bill, GH¢192.20 million was sold.
In terms of the interest yield, the 3-months bill went for 12.49%, whereas the 182-day bill also went for 13.17%. That of the 1-year bill was auctioned for 16.13%. Comparing with that of the previous week, the interest cost for the 91-day bill went up by 400 basis points, whilst the 182-day bill went down to 13.17%, from 13.21%.
International ratings agency, Moody’s, had recently reviewed Ghana’s ratings to B3 with a negative outlook and this could potentially drive interest cost going forward.
Nonetheless, there is still some interest in financial instruments, because investors largely banks perceive government instruments as risk free.
Some analysts had claimed that banks which are the biggest investors of Treasury bills had opted to liquidate some of their maturing bills in order to augment their cash balance as liquidity tightens.
Others also raised concerns that government’s surge in domestic borrowing could crowd out the private sector from accessing funds.
SECURITIES BIDS TENDERED (GH¢) BIDS ACCEPTED (GH¢) INTEREST RATE
91-day 878.41 million 878.41 million 12.49%
182-day 137.25 million 137.25 million 13.17%
1-year 192.20 million 191.60 million 16.13%
TOTAL 1.207 billion 1.207 billion
TARGET 1.474 billion
