Ghana’s government has fallen short of its Treasury bill target for the third consecutive week, with the latest auction recording a 32.19 percent undersubscription as investors continue to show restraint in a tightening market environment.
The auction results, released by the Bank of Ghana (BoG), show the government received GH¢3.16 billion in bids against a target of GH¢4.63 billion, ultimately accepting GH¢2.84 billion. Investor preference remained firmly concentrated at the short end of the curve, with the 91-day bill attracting GH¢2.02 billion in bids representing 63.8 percent of total demand of which GH¢1.99 billion was accepted.
The 182-day bill recorded GH¢498.93 million in bids with GH¢416.93 million accepted, while the 364-day bill saw GH¢648 million tendered.
The skew toward the shortest-dated instrument reflects investor caution, with many preferring to keep their funds liquid rather than committing to longer maturities during a period of global uncertainty driven by the ongoing conflict in the Middle East, which has disrupted supply chains and raised costs across key sectors of the economy.
Despite the weak demand, borrowing costs edged higher. The 91-day bill rate held steady at 4.81 percent, while the 182-day yield rose by 9 basis points to 6.71 percent and the 364-day bill climbed by 7 basis points to 9.84 percent.
The rising yields present a dilemma for economic managers. For savers and institutional investors, the marginal uptick in returns is welcome after months of declining rates. But for the business community, higher Treasury bill yields tend to act as a floor for commercial lending rates, meaning the recent downward trend in borrowing costs may be under threat just as businesses were beginning to benefit from cheaper credit.
Market watchers also point to the recently issued 7-year bond as a competing factor, with some investors diverting funds into the longer-dated instrument the first real alternative to Treasury bills for many domestic investors since Ghana’s domestic debt exchange.
Looking ahead, the government has raised its borrowing target sharply to GH¢7.57 billion for the next auction, signalling increased short-term financing needs, though whether the market can absorb that volume at current yields remains to be seen.
