Ghana’s Treasury bill market has recorded its sixth consecutive undersubscription, but the latest auction data suggests the worst of the demand drought may be passing, with the shortfall narrowing to its smallest margin since the streak began.
At last week’s auction, the government targeted GH¢4.475 billion but received bids totalling GH¢4.434 billion, a shortfall of GH¢41.05 million. The gap of just 0.92 percent marks a sharp improvement from the 29 to 32 percent undersubscriptions recorded in earlier weeks of the same run. The government accepted GH¢3.897 billion of the bids submitted, reflecting a continued effort to manage borrowing costs even as financing conditions remain tight.
The contrast with preceding auctions is significant. As recently as April 10, the government missed a GH¢7.57 billion target by nearly 30 percent. The gradual recalibration of targets in subsequent auctions, down to GH¢4.89 billion and then to the current GH¢4.475 billion, appears to have brought government ambitions closer into alignment with market appetite.
Interest rate movements across the three instruments were mixed. The yield on the 91-day Treasury bill declined from 4.9480 percent to 4.9244 percent, while the 182-day bill rose from 6.9099 percent to 6.9630 percent. The 364-day bill edged marginally lower from 10.1283 percent to 10.1239 percent. The divergence suggests investors remain attentive to yield dynamics, particularly at the medium-term end of the curve, even as overall sentiment stabilises.
Demand remained concentrated in shorter-dated instruments, with the 91-day bill attracting GH¢2.8 billion in bids, the 364-day bill drawing GH¢960.08 million, and the 182-day bill receiving GH¢717.64 million. Analysts had previously attributed the sustained undersubscription run to a widening yield gap between Treasury bills and Bank of Ghana (BoG) instruments, which were offering comparatively higher returns and drawing institutional capital away from government securities.
The BoG absorbed a record GH¢389.1 billion in excess banking system liquidity during the first quarter of 2026 through open market operations, a tightening posture that contributed to conditions where its own instruments competed with government paper for investor allocations.
For the government, the steady improvement is welcome but the financing environment remains constrained. Treasury bills are a primary tool for managing short-term cash flow and budget gaps, and six straight auctions falling below target have complicated planning at the Ministry of Finance. With the shortfall now approaching negligible levels, the question for the coming weeks is whether the market has found a new equilibrium or whether demand will resume more strongly as yields stabilise and investor confidence continues to build.
