- Treasury-Bill Demand Surges 73% As Government Raises GH¢4.4 billion Above Target
Investor demand for Ghanaian Treasury bills strengthened sharply at the October 9 auction, allowing the government to raise GH¢4.40 billion more than twice the amount accepted a week earlier and 53% above its borrowing target.
The Bank of Ghana received total bids of GH¢5.06 billion across the 91-day, 182-day and 364-day instruments, compared with GH¢2.93 billion at the October 2 auction.
This represented a week-on-week increase of GH¢2.14 billion, or 73%.
The government accepted GH¢4.40 billion of the bids, up from GH¢1.77 billion in the preceding auction. The amount accepted increased by GH¢2.63 billion, or 148%.
The scale of the increase reflects not only stronger investor demand but also a significantly greater willingness by the government to take the funds offered.
At the previous auction, only 60.6% of total bids were accepted. That ratio rose to 86.9% at the latest sale.
The auction target had been raised by 28% to GH¢2.87 billion from GH¢2.24 billion. Yet the government accepted 153.4% of the latest target, compared with only 79.1% of its target at the preceding auction.
The result signals a marked change in the issuer’s borrowing posture. A week earlier, the government rejected a large share of bids and raised less than planned. At the October 9 auction, it accepted nearly nine out of every 10 cedis offered and borrowed substantially more than its announced target.
Auction comparison
| INDICATOR | OCTOBER 2 AUCTION | OCTOBER 9 AUCTION | CHANGE |
| Auction target | GH¢2.24bn | GH¢2.87bn | +28.0% |
| Total bids received | GH¢2.93bn | GH¢5.06bn | +73.0% |
| Total bids accepted | GH¢1.77bn | GH¢4.40bn | +148.2% |
| Bid coverage ratio | 130.5% | 176.4% | +45.9 percentage points |
| Acceptance rate | 60.6% | 86.9% | +26.3 percentage points |
| Accepted amount versus target | 79.1% | 153.4% | +74.3 percentage points |
The bid coverage ratio, the amount tendered relative to the auction target, rose from 130.5% to 176.4%. This means investors submitted GH¢1.76 for every GH¢1 the government originally planned to borrow.
Stronger coverage ordinarily gives the government greater bargaining power over yields. That advantage was visible across all three tenors, where weighted average rates declined despite the substantial increase in borrowing.
The 91-day bill remained the dominant instrument, attracting GH¢3.29 billion in bids, up 48.4% from GH¢2.22 billion in the previous auction.
The government accepted GH¢3.01 billion, representing 91.4% of the amount tendered. This was significantly above the GH¢1.39 billion accepted a week earlier.
The three-month instrument accounted for 64.9% of all bids and 68.3% of the total amount accepted.
Although this confirmed the continuing preference for short-dated government paper, its share of total bids declined from 75.7% in the previous week. Part of the demand shifted into the six-month instrument.
The 182-day bill recorded the most striking change.
Bids increased more than fivefold from GH¢235.19 million to GH¢1.31 billion. The government accepted GH¢1.26 billion, compared with only GH¢153.69 million at the preceding auction.
The acceptance rate for the six-month bill reached 96.3%, the highest among the three tenors.
Its share of total bids rose from 8% to 25.8%, while its share of accepted funds increased from 8.7% to 28.6%.
This suggests that investors were willing to extend maturity modestly beyond the 91-day instrument, particularly as the 182-day bill offered an interest-equivalent yield of 6.2791%.
The demand shift is important because Ghana’s Treasury market has frequently been dominated by very short-term instruments. Greater appetite for six-month bills could provide slightly more refinancing space for the government, although it remains far short of the duration extension that would come from strong demand for one-year or longer securities.
Demand for the 364-day bill was broadly unchanged in nominal terms. The government received bids of GH¢468.92 million, down slightly from GH¢474.85 million in the previous week.
However, the amount accepted fell sharply from GH¢224.35 million to GH¢136.26 million a decline of 39.3%.
Only 29.1% of bids submitted for the one-year bill were accepted, compared with acceptance ratios of 91.4% for the 91-day bill and 96.3% for the 182-day instrument.
The divergence appears to reflect a mismatch between the yields demanded by investors and what the government was prepared to pay.
Investors submitted one-year bids at discount rates ranging from 8.8% to 11.5044%. But the government allotted in full only bids between 8.8% and 8.9916%.
The narrow accepted range indicates that bids seeking materially higher returns were rejected.
Consequently, the one-year bill contributed only 3.1% of the total amount raised, down from 12.7% at the previous auction.
The result shows that while overall demand strengthened, investors and the government have not reached broad agreement on the price of longer short-term debt. Investors appear to require a larger premium to lock funds away for one year, while the Treasury is resisting those higher rates.
Weighted average yields declined across the three maturities.
The interest-equivalent rate on the 91-day bill fell to 4.6042% from 4.6413%, a decline of 3.71 basis points.
The 182-day rate dropped by 4.02 basis points to 6.2791% from 6.3193%, while the 364-day rate decreased by 4.94 basis points to 9.7523% from 9.8017%.
| INSTRUMENT | OCTOBER 2 INTEREST RATE | OCTOBER 9 INTEREST RATE | WEEKLY CHANGE |
| 91-day bill | 4.6413% | 4.6042% | -3.71 basis points |
| 182-day bill | 6.3193% | 6.2791% | -4.02 basis points |
| 364-day bill | 9.8017% | 9.7523% | -4.94 basis points |
The decline in yields alongside a 73% increase in bids points to stronger competition among investors for government paper.
It also suggests that the Treasury was able to raise considerably more money without conceding higher average rates. Selective rejection of expensive bids, particularly at the one-year tenor, helped contain borrowing costs.
However, the government’s ability to sustain declining rates will depend on whether demand remains strong when the size of the weekly funding requirement rises further.
The government has set a target of GH¢5.02 billion for the next auction, a 74.9% increase over the GH¢2.87 billion target for the October 9 sale.
The new target is also GH¢618.69 million above the amount raised at the latest auction.
Such a large target signals a significant near-term cash requirement. This may be associated with maturing Treasury obligations, fiscal financing requirements or both, although the auction notice does not provide a breakdown.
Meeting the target at current yields would require demand to remain close to—or exceed—the GH¢5.06 billion received at the latest auction.
The government may also have accepted more than the October 9 target in anticipation of the larger requirement ahead. Raising excess funds during a heavily subscribed auction can provide a cash buffer and reduce the risk of relying entirely on the next sale.
Yet consistently accepting amounts far above announced targets could make the target a weaker guide to actual borrowing. Investors and analysts will increasingly focus on maturities, government cash flows and the acceptance pattern rather than the headline target alone.
The latest auction points to stronger demand for Treasury securities, particularly at the three- and six-month maturities.
The decline in yields reinforces the view that liquidity was sufficient to support government borrowing without an increase in pricing. Investors may also see short-term bills as attractive instruments for liquidity management, especially where alternative low-risk assets remain limited.
But the structure of demand remains conservative.
More than 94% of accepted funds were concentrated in the 91-day and 182-day bills. The limited acceptance of 364-day bids shows that the market remains reluctant to extend duration without a substantial yield premium.
This leaves the government exposed to frequent refinancing. Short maturities may reduce immediate interest costs, but they require the Treasury to return repeatedly to the market to repay or roll over obligations.
The October 9 auction was therefore strong in demand and favourable in pricing, but it did not resolve Ghana’s underlying maturity challenge.
The decisive test will come at the next auction. If investors provide more than GH¢5 billion while yields remain stable or decline, it would confirm significant liquidity and sustained confidence in short-term government paper.
If demand weakens or investors insist on higher rates, the government may have to choose between missing its unusually large target and paying more to secure the funds.
