BY Nadia Ntiamoah
The government has once again fallen short of its target in the latest Treasury bill (T-bills) auction, marking the second consecutive week of undersubscription despite a marginal decline in interest rates across all tenors.
According to data released by the Bank of Ghana (BoG), the auction recorded a 30% shortfall as total bids amounted to GH¢2.59 billion, with the government accepting GH¢2.57 billion.
This performance reflects waning investor appetite for short-term government securities, as investors continue to shift funds toward higher-yielding instruments such as Bank of Ghana bills and fixed deposits.
Out of the total bids, the 91-day bill continued to dominate the market, accounting for over 78% of total subscriptions.
Investors tendered about GH¢2.028 billion for the 91-day paper, of which GH¢2.023 billion was accepted.
The 182-day bill followed with bids totaling GH¢394.4 million, slightly lower than the previous week’s figure, while GH¢389.4 million was accepted.
The 364-day bill also saw modest participation, with GH¢170.6 million tendered and GH¢165.6 million accepted.
Despite the underperformance in subscriptions, interest rates declined marginally across the board.
The yield on the 91-day bill fell by 3 basis points to 10.47%, while the 182-day bill decreased from 12.39% to 12.35%.
Similarly, the 364-day bill dropped by 2 basis points to 12.87%.
Analysts say the persistent undersubscription could be attributed to tighter liquidity conditions in the banking sector and growing competition from alternative instruments offered by the central bank.
“Investors are clearly prioritizing returns and liquidity. With Bank of Ghana bills offering higher yields, the government is struggling to attract enough bids at its current rates,” an economist familiar with the auction results explained.
The government’s struggle to meet its T-bill targets comes at a time when it relies heavily on short-term domestic borrowing to finance its operations amid limited access to external markets.
Over the past year, Treasury bills have become a crucial financing tool, especially following the debt restructuring programme under the International Monetary Fund (IMF) support package.
In recent months, authorities have aimed to gradually reduce borrowing costs by stabilizing yields, as part of broader fiscal consolidation efforts.
The marginal decline in yields observed in the latest auction may therefore signal some success in lowering short-term borrowing costs.
However, the continued undersubscription raises questions about the sustainability of this trend, particularly if investor confidence remains subdued.
The next auction is expected to test whether the government can reverse the declining participation trend, as market watchers anticipate that investor behavior will hinge on shifts in liquidity and yield differentials across instruments.
