Gov’t exceeds Q1 2024 T-Bill borrowing target by 24.8%
Government surpassed its net borrowing targets for treasury bills in the first quarter of 2024, raising GH¢24.6 billion, a staggering 24.8% over the intended mark. This surge comes amidst a backdrop of heightened investor interest, with average weekly bids reaching GH¢5.1 billion, up from GH¢3.5 billion in the preceding quarter.
Despite initial concerns over inflationary pressures, Ghana’s treasury bill market has witnessed a remarkable average decline of 340 basis points in yields, reflecting the keen appetite among investors. However, looming regulatory adjustments, particularly the Cash Reserves Requirement (CRR) calibration, may introduce liquidity constraints, potentially tempering the fervor seen in recent bidding activity.
Noteworthy is the substantial reduction in interest rates since the commencement of the year, with a sweeping decrease of approximately 3.6%. Notably, the 91-day, 182-day, and 364-day treasury bill rates have each experienced declines of 3.71%, 3.72%, and nearly 4.0%, respectively.
Despite these notable shifts, Ghana’s yields maintain their distinction as the highest among key African markets, outstripping rates in Egypt, Kenya, and Malawi, which stand at 24.98%, 16.73%, and 16.00%, respectively.
However, recent market dynamics have witnessed a dip in investor demand, with money market auctions falling short of the treasury’s target. This waning enthusiasm is attributed to banks bolstering cash reserves to meet regulatory thresholds, as loan-to-deposit ratios languish below 55%.
Looking ahead, analysts foresee a potential softening in demand for treasury bills and a deceleration in yield declines, highlighting a shift in sentiment amid evolving market conditions. As Ghana’s treasury bill market navigates regulatory adjustments, stakeholders remain vigilant, and poised to adapt to emerging trends in this dynamic financial landscape.
