Investor Demand for T-Bills Weakens as Treasury Falls 23% Short of Target

Investor appetite for T-Bills continued to weaken last week, leading to another undersubscription at the government’s latest auction. Despite the Treasury’s plan to raise GH¢6.42 billion, bids submitted across all maturities amounted to only GH¢4.9 billion—missing the target by 22.82%. The trend underscores growing investor caution in Ghana’s short-term debt market.

According to the latest auction data from the Bank of Ghana, the 91-day bill remained the most preferred option, attracting GH¢3.93 billion in bids, with GH¢3.82 billion accepted. The 182-day bill received GH¢749 million in tenders, slightly below expectations, while the 364-day bill pulled in GH¢266 million, of which GH¢263 million was accepted. The results reflect a cautious but selective approach from market participants.

Market analysts say institutional investors—particularly banks—are holding back due to relatively low yields on Treasury bills compared to other short-term investment alternatives. The Bank of Ghana’s continued issuance of its own bills at more attractive yields is also diverting demand away from government securities. With liquidity conditions still tight, firms are prioritizing instruments that offer quicker or more competitive returns.

Yields posted only modest movements across the curve, offering little incentive for investors to shift positions. The 91-day bill inched up by 11 basis points to 11.13%, while the 182-day bill saw a mild increase of 2 basis points to 12.68%. In contrast, the 364-day bill slipped slightly to 13.06%, signaling mixed investor sentiment toward longer short-term placements.

Looking ahead, the Treasury aims to raise GH¢2.86 billion in its next auction across the three short-term maturities. Whether investor enthusiasm rebounds remains uncertain, but analysts say yield adjustments or improved liquidity conditions may be necessary to restore confidence and boost participation.

source: citi newsroom