Rising Inflation: Investors to continue demanding higher yields on debt securities – Databank
Databank Research, the research arm of investment bank, Databank, has said investors will continue to demand higher yields on treasury bills and other short-term securities to compensate for the country’s rising inflation.
Inflation has been surging and it’s uncertain whether the rate will fall anytime soon. Though interest rates have been rising, investors are not so much enthused about the yields because it is far lower than the current rate of inflation.
However, the report said investors will maintain their interest in T bills for re-pricing benefits while focusing on the near to medium-term maturities in the secondary market.
“Headline inflation came in at 37.20%, fueled by housing and utilities, household furnishings, and transport. We expect investors to continue demanding higher yields to compensate for the rising inflation,” stated Databank Research.
Last week, the government failed to meet the auction target of Treasury bills.
But this week the government is seeking to raise GHS 1.44 billion from the 91-day to 182-day bills to refinance the upcoming T-bill maturities of GHS 1.44 billion.
Last week, trading activity on the secondary market increased to GHS 3.25 billion (+31.98% w/w).
The 2022-2025 maturities saw 33.2% of trades last week, while the 2026-2029 maturities accounted for 58.8% of the turnover.
Strong selling pressures persisted as the yield curve widened by an average of 100 basis points. Yields continue to climb as the market remains net offered.
