The latest Treasury bill auction conducted by the Bank of Ghana ended in a shortfall, with the government falling GHS393 million below its fundraising target. The government had aimed to raise GHS7.58 billion but only managed to secure bids totaling GHS7.19 billion, reflecting a 5.19% undersubscription. This development highlights a waning investor appetite despite previously strong demand.
Unlike recent auctions where authorities were selective in accepting bids, the government took nearly all offers this time, especially in the shorter-term bills. All bids for the 91-day and 182-day instruments were accepted—GHS6.02 billion and GHS995 million respectively. For the 364-day paper, GHS173 million out of GHS204 million in bids was taken up.
Analysts suggest the government’s strategy is influenced by a need to meet upcoming maturities. The high level of acceptance, particularly for the 91-day bill, indicates a focus on liquidity management rather than yield optimization. The shift could also signal tighter market conditions or an effort to stimulate demand through rate moderation.
Interest rates continued their downward trajectory across all tenors. The 91-day yield declined by 9 basis points to 14.70%, the 182-day dropped by 21 basis points to 15.25%, and the 364-day dipped by 6 basis points to 15.74%. These falling yields reflect both central bank policy direction and market expectations of easing inflation.
Looking forward, the government plans to raise GHS4.55 billion in the next auction cycle. Market watchers will be monitoring how investor sentiment and interest rates evolve, particularly as the government balances refinancing pressures with declining returns on short-term debt instruments
Source: Citi newsroom