T-Bill oversubscribed by 15% as Gov’t raises GHS 3.5bn at average interest cost of 28.1%
Treasury Bill auction by the Government witnessed robust investor appetite, though not without cost as yields surged across the curve.
According to data released by the Bank of Ghana, the Treasury Bill auction saw an oversubscription of 15.35%, reflecting investors’ keen interest. The government successfully raised ¢3.507 billion from the sale, while bids tendered reached ¢3.535 billion, highlighting an excess demand of nearly ¢28 million.
The 91-day Treasury Bill emerged as the most sought-after instrument, with a substantial allocation of ¢2.526 billion. The government accepted nearly all bids for this short-term security, underscoring the enthusiasm among investors for the lower-maturity bill.
Turning to the 182-day Treasury Bill, the government secured ¢261.69 million from the bids tendered, and once again, all bids were accepted. Meanwhile, the one-year Treasury Bill drew remarkable interest, garnering bids three times higher than those for the 182-day instrument. Although ¢747.81 million in bids were submitted, the government chose to accept ¢721.03 million of these offers.
However, the positive reception came at a cost as interest rates climbed across the yield curve. The 91-day bill experienced an uptick to 26.09%, up from 25.57% the preceding week. Similarly, the 182-day bill observed a 0.31% rise, settling at 27.59%. Meanwhile, the yield on the 364-day bill surged to 30.69%, marking an increase from the previous week’s 30.49%.
Market analysts anticipate that this upward trajectory in interest rates will persist until the government finalizes its debt restructuring efforts. The substantial borrowing plan announced by the government to secure ¢38.959 billion via Treasury bills in the third quarter of 2023 underscores its commitment to addressing mounting liquidity needs. These short-term debt instruments will be offered on a weekly basis, aligning with the government’s strategy to navigate prevailing financial challenges.
Ghana’s recent Treasury Bill auction showcased strong demand from investors, signaling their confidence in the government’s fiscal measures. However, the resultant uptick in yields sheds light on the balancing act the government faces as it seeks to fund its operations while managing the costs associated with increased borrowing.
