Ghana Treasury Bill Auction Undersubscribed: Government Misses Target by ¢2 Billion Amid Weak Bank Liquidity

Ghana’s government fell short of its Treasury bill (T-bill) target last week, underscoring growing investor caution and tight liquidity within the banking sector. According to fresh data from the Bank of Ghana, the government secured only ¢3.46 billion in bids from investors, compared to its ambitious target of ¢5.58 billion. This shortfall of ¢2.11 billion – roughly 37.5 percent below expectations – signals a cooling appetite for short-term government securities at a time when fiscal needs remain high.

Despite the overall undersubscription, the 91-day T-bill continued to attract the strongest investor interest. The Treasury accepted ¢2.65 billion out of ¢2.66 billion tendered for the three-month note, reflecting its status as the preferred low-risk option for commercial banks and retail investors. The 182-day bill saw ¢695 million accepted out of ¢705 million tendered, while the longer 364-day note drew just ¢116 million in accepted bids out of ¢119 million offered.

Market analysts say the weak demand for T-bills is largely due to liquidity constraints among banks. The Bank of Ghana’s recent open market operation absorbed nearly ¢19 billion ahead of the auction, limiting funds available for government securities. In addition, a persistent low appetite for short-term debt has also dampened subscription levels, making it harder for the government to hit its borrowing targets.

The auction results also nudged yields slightly upward across the board as the government adjusted to weaker demand. The 91-day bill yield rose by 5 basis points to 10.50 percent, up from 10.45 percent the previous week. The 182-day bill moved up by 3 basis points to 12.39 percent from 12.36 percent, while the 364-day note edged up by 1 basis point to 12.89 percent from 12.88 percent. Higher yields typically make T-bills more attractive, but investors remain cautious due to liquidity pressures.

Looking ahead, the government plans to raise ¢3.71 billion in this week’s auction to meet short-term financing needs. Analysts say improving investor confidence will depend on better liquidity conditions and more competitive yields. For ordinary Ghanaians, Treasury bills remain a relatively safe investment option, but the recent undersubscription highlights the challenges facing the country’s domestic borrowing strategy as it balances fiscal obligations with market realities.

source: citi newsroom