T-Bill Auction: Gov’t mobilizes GHS 2.56bn at average interest cost of 23.4%
The Ghanaian government has announced the oversubscription of its recent issuance of short-term debt securities, which included 91-day, 182-day, and 364-day T-Bills, demonstrating strong investor demand. The government’s auction target of GHS 1,834m was exceeded by GHS 732m, with the total bids tendered by primary dealers reaching GHS 2,566m.
Despite ongoing challenges facing the Ghanaian economy, including high inflation, a large fiscal deficit, and a volatile currency, the oversubscription of the recent debt securities issuance highlights investors’ confidence in the country’s economic prospects. The government’s successful issuance of short-term debt securities also reflects its ongoing efforts to manage the country’s financing needs and meet its budgetary requirements.
The government was able to accept all bids tendered for the three securities, with the interest rates ranging from 20.2% for the 91-day T-Bill to 22.8% for the 182-day T-Bill and 27.3% for the 364-day T-Bill, indicating an average interest cost of 23.4%. These rates reflect the current economic situation in Ghana, which has struggled with macroeconomic challenges for some time.
Despite these difficulties, the government’s efforts to address the issues have helped maintain investor interest in the country’s debt securities. Fiscal consolidation measures, as well as support from international financial institutions like the World Bank, have contributed to sustaining investor confidence.
Furthermore, the strength of Ghana’s primary dealer network has also played a crucial role in facilitating the issuance and trading of government securities in the domestic market. The network comprises banks, brokers, and other financial institutions, ensuring the liquidity and stability of Ghana’s debt market.
However, the government will need to continue its efforts to manage its fiscal and economic challenges effectively, including through ongoing structural reforms and prudent macroeconomic policies. These measures will be critical to maintaining investor confidence in Ghana’s debt securities and sustaining the country’s long-term economic growth and development.
Looking ahead, the government is set to issue more short-term debt securities in a bid for fresh funding. The upcoming issuance of 91-day, 182-day and 364-day T-Bills on May 12, 2023, is part of this strategy, with the government aiming to secure GHS 3,333m in funding.
