The Ghanaian government has rejected GHS 2.9 billion in Treasury bill bids following a significant over-subscription of 40.5% during its latest auction. The government had initially aimed to raise GHS 7.3 billion, but the final amount accepted exceeded expectations, reaching GHS 7.7 billion. This oversubscription was driven by investor interest, with total bids amounting to GHS 10.6 billion.
Despite the strong demand for Treasury bills, the government turned down GHS 2.9 billion worth of offers. The likely reason for this rejection is the higher-than-expected interest rates from investors. This decision highlights the government’s focus on controlling borrowing costs amidst ongoing fiscal challenges. The demand was particularly high for the 91-day bill, with GHS 6.1 billion in bids, and GHS 3.9 billion being accepted.
Among the different Treasury bills, the 91-day bill saw the highest demand, attracting GHS 6.1 billion in bids. Of these, GHS 3.9 billion was accepted, with the yield on the 91-day bill declining by 43 basis points to 27.98%. The 182-day bill also garnered substantial interest, receiving GHS 4.4 billion in bids, of which GHS 3.8 billion was accepted. The yield on the 182-day bill decreased by 21 basis points to 28.68%.
Interestingly, the government did not issue any 364-day Treasury bills during this auction, a notable deviation from previous offerings. This absence could be part of the government’s broader strategy to reduce borrowing costs while managing fiscal consolidation measures. The Treasury’s cautious approach to long-term borrowing is aligned with its efforts to stabilize the yield curve and ensure fiscal responsibility.
Looking forward, the government plans to raise GHS 8 billion in its next T-bill auction. Despite rejecting a large portion of the bids in the current auction, expectations for continued strong demand remain. Additionally, the decline in interest rates, alongside easing inflation in January, reassures investors that their real returns will remain unaffected, further supporting investor confidence in the Treasury’s upcoming offerings.
Source: CITI NEWSROOM