- Treasury Auction Draws GH¢2.93bn but Government Accepts Only GH¢1.77bn
The government rejected more than GH¢1.15bn of investor bids at its latest Treasury-bill auction as it sought to contain borrowing costs, accepting less than its stated financing target despite strong overall subscription.
Investors submitted bids worth GH¢2.93bn for the 91-day, 182-day and 364-day instruments at Tender 2027, conducted on October 2 for settlement on October 5.
The amount tendered represented approximately 130.5 per cent of the government’s GH¢2.24bn target, implying an apparent oversubscription of GH¢684m.
However, the government accepted only GH¢1.77bn, equivalent to 79.1 per cent of the target and 60.6 per cent of the total bids received.
The auction consequently produced an unusual combination: investor bids exceeded the financing target, but the government still raised GH¢468.42m less than planned because a large share of submissions was rejected.
The result suggests that the Treasury prioritised yield control over raising the full target at the interest rates demanded by some investors.
The clearest evidence of pricing discipline emerged from the difference between the rates investors submitted and those accepted in full.
For the 91-day bill, investors demanded discount rates ranging from 4.45 per cent to 7.7 per cent. The government accepted in full only bids between 4.45 per cent and 4.7431 per cent.
The security recorded a weighted-average discount rate of 4.59 per cent and an interest-equivalent rate of 4.64 per cent.
On the 182-day bill, bid rates ranged from 5.9 per cent to 8.51 per cent, but full allotments were restricted to discount rates between 5.9 per cent and 6.29 per cent.
The weighted-average discount rate settled at 6.13 per cent, equivalent to an interest rate of 6.32 per cent.
Investors bidding for the one-year bill submitted rates between 8.68 per cent and 11.46 per cent. The government accepted in full only bids up to a discount rate of 9.09 per cent, corresponding with an interest rate of 10 per cent.
The 364-day instrument cleared at a weighted-average discount rate of 8.93 per cent and an interest-equivalent yield of 9.80 per cent.
By declining to accept the highest bids, the government prevented the marginal rates demanded by investors from setting the cost of the entire auction.
The strategy reduced the amount raised but protected the Treasury from locking in more expensive short-term debt.
The 91-day bill remained the government’s principal source of auction financing.
Investors submitted GH¢2.22bn for the three-month instrument, representing approximately 75.7 per cent of total bids. The government accepted GH¢1.39bn, equivalent to 79 per cent of the total amount sold.
The acceptance rate for the 91-day bill was approximately 63 per cent.
The 182-day bill attracted GH¢235.19m, of which GH¢153.69m was accepted. This produced the highest maturity-level acceptance rate of about 65.3 per cent.
Demand for the 364-day bill reached GH¢474.85m, but the government accepted only GH¢224.35m less than half the amount tendered.
The one-year bill consequently recorded an acceptance rate of approximately 47.3 per cent, the lowest of the three maturities.
This indicates that pricing disagreements were greatest at the longer end of the Treasury-bill curve.
Investors appeared willing to commit almost GH¢475m for one year, but many demanded rates above the government’s preferred ceiling. The Treasury accepted in full only interest rates of between 9.5 per cent and 10 per cent, rejecting bids that extended as high as 11.46 per cent on a discount basis.
The pattern suggests that investors continue to require a noticeable premium to extend maturity beyond three or six months, while the government remains reluctant to validate the highest yield demands.
The GH¢1.77bn accepted represents a considerable decline from the preceding Treasury-bill auction.
Tender 2026, conducted on September 25, attracted bids worth GH¢3.66bn and recorded total sales of GH¢2.90bn.
Compared with that auction, the amount tendered fell by approximately 20 per cent, while the value sold declined by 38.8 per cent.
The sharper reduction in accepted bids indicates that weaker investor submissions alone did not account for the decline. The government also became more selective about the rates it was prepared to accept.
Total rejected bids increased to GH¢1.15bn in the latest auction. This was equivalent to 39.4 per cent of all submissions.
The lower issuance may reduce immediate interest costs, but it also means that the government must cover the GH¢468m target shortfall through cash balances, alternative funding or higher borrowing at subsequent auctions.
The government has set a higher target of GH¢2.87bn for Tender 2028.
The new target is GH¢628m, or 28 per cent, above the target for the October 2 auction. It is also approximately 62 per cent higher than the GH¢1.77bn actually accepted.
This creates a difficult test for the Treasury’s pricing strategy.
To raise the full GH¢2.87bn at the next auction, the government will require stronger investor participation, greater acceptance of submitted bids or both.
If investors continue demanding rates materially above the government’s preferred range, the Treasury may again have to choose between missing its target and allowing yields to rise.
The latest auction shows that demand for government paper remains available: bids exceeded the target by more than 30 per cent. The constraint was the price at which investors were prepared to lend.
That distinction matters. An undersubscribed auction would indicate insufficient demand. This auction instead revealed a disagreement between borrower and lender over the appropriate yield.
For now, the government appears prepared to accept less money rather than pay the highest rates submitted.
Whether that approach can be sustained will depend on its cash position, upcoming maturities and the scale of its refinancing requirements. With the next borrowing target rising to GH¢2.87bn, the negotiation between funding needs and yield discipline is likely to become more demanding.
