The Government of Ghana has once again missed its treasury bills (T-bills) target, marking the third consecutive week of undersubscription, as investors continue to favor high-yielding financial instruments such as fixed deposits.
T-Bills Undersubscribed by Nearly 10%
According to the latest auction results from the Bank of Ghana (BoG), total bids tendered amounted to GH¢5.817 billion, but the government accepted GH¢5.754 billion, falling short of its target by almost 10%.
The 91-day bill dominated demand, accounting for GH¢4.049 billion of the bids submitted, with GH¢4.029 billion eventually accepted.
For the 182-day bill, investors tendered GH¢1.337 billion, of which GH¢1.327 billion was accepted.
On the longer-term 364-day bill, bids reached GH¢430.38 million, with GH¢397.82 million taken up.
Interest Rates Adjust as Investor Sentiment Shifts
The undersubscription has been accompanied by a rise in interest rates on short-term securities.
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The 91-day bill yield climbed by 28 basis points, reaching 10.41%.
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The 182-day bill yield rose slightly to 12.38%, compared to 12.23% the previous week.
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In contrast, the 364-day bill yield declined marginally by 8 basis points, settling at 13.00%.
Investor Preference Tilts Towards Higher Yields
Market analysts suggest that investor appetite is shifting toward instruments with better risk-adjusted returns, such as fixed deposits and medium-term securities, reducing participation in short-term government securities.
The government’s reliance on T-bills to finance short-term obligations has faced increasing pressure as investors demand higher returns to compensate for inflation risks and uncertainties in the economic environment.
Outlook for Ghana’s Debt Financing
With yields trending upward, the government may face increased borrowing costs in the coming weeks if undersubscription persists. Analysts caution that unless confidence in the fiscal outlook improves, demand for T-bills may remain sluggish, compelling the government to adjust its debt strategy.
Source: Trendz Gh
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