T-Bills Undersubscription Continues as Gov’t Misses Target by GHS 719 Million In Second Auction Week
The government raised GHS 4.06 billion through the issuance of short-term debt instruments on Friday, July 26, falling short of its GHS 4.77 billion target.
This resulted in an undersubscription rate of 15.04%, leaving a funding gap of GHS 719 million.
Despite positive returns on these short-term debt instruments, with interest rates on Treasury Bills surpassing the inflation rate of 22.8%, the undersubscription may be attributed to reduced liquidity among primary dealers, mainly commercial banks, who are adjusting to a new cash reserve ratio requirement from the Central Bank.
This adjustment could lead to increased lending to the private sector, aligning with the Central Bank’s objectives.
Already, credit to the private sector for the first half of the year has risen to 17.6%, a slight increase from 16.1% recorded during the same period last year.
Investor interest was highest in the 91-day Treasury bill, followed by the 182-day and 364-day bills.
Accepted bids amounted to GHS 2.40 billion for the 91-day bill, GHS 1.17 billion for the 182-day bill, and GHS 477 million for the 364-day bill.
The yield on the 91-day bill remained steady at 24.78%, while the yield on the 182-day bill increased marginally by 0.03% to 26.74%.
The 364-day bill saw a slight yield increase of 0.05%, settling at 27.85%.
In the upcoming T-Bill auction, the government aims to raise GHS 4.36 billion through the issuance of 91-day, 182-day, and 364-day bills, continuing efforts to manage short-term liquidity needs and investor demand.
