Ghana’s T-Bill Rates Plummet to New Lows: What’s Next for Investors?

On February 28, 2025, treasury bill rates saw a remarkable drop, marking one of the most significant declines in decades. Auction results from the Bank of Ghana revealed that rates, which were between 28% and 30% at the start of the year, have now fallen to a range of 20% to 22%. The steep drop is attributed to a combination of strong investor demand and the Treasury rejecting higher bids. The 91-day Treasury bill rate, once at 28.34%, fell to 20.79%, while the 182-day and 364-day bills also experienced sharp declines.

The pace and extent of the decline in T-bill rates have surprised many analysts. While the overall trend was anticipated, the drop has raised questions about how low rates can go. Factors such as inflation and monetary policy play a crucial role in determining the future of T-bill yields. If inflation remains stable and the Bank of Ghana’s monetary policy continues to reduce borrowing costs, the rates may continue to fall, potentially reaching the 18-20% range.

Market liquidity and investor sentiment are also important in shaping T-bill rates. There has been strong demand for government securities, despite the declining rates. This high demand could push rates lower, but it is uncertain whether they will dip below 18% without significant changes in inflation control or policy shifts. The next moves by the Bank of Ghana, especially in terms of monetary policy and borrowing needs, will be essential in determining where rates eventually stabilize.

Despite the sharp decline in T-bill rates, the government managed to exceed its target in the latest auction, receiving GHS 7.41 billion in bids for a target of GHS 6.49 billion. This oversubscription indicates strong investor interest, particularly in longer-term bills. Looking ahead, the Treasury plans to raise GHS 5.74 billion in the upcoming auction, with analysts closely watching whether the downward trend in rates will persist or begin to level out.

SOURCE: CITI NEWSROOM