Investors have aggressively pursued Treasury bills (T-bills) in the latest auction, pushing total bids to GH¢8.2 billion—far exceeding the targeted GH¢6.85 billion.
This 19.75% oversubscription underscores market participants’ strong interest in locking in high-yield investments as they anticipate potential policy shifts that could alter borrowing costs in the coming months.
The Treasury responded by accepting all submitted bids, reflecting the robust demand for government securities. Analysts from Databank noted that the surge in investor interest is largely driven by expectations that the incoming administration will implement measures aimed at reducing borrowing costs.
The target coverage ratio stood at 1.19x, and the maturity coverage ratio was 1.27x, indicating strategic positioning that goes beyond typical market participation. Yields across the three primary T-bill tenors saw notable increases, with 91-day bills yielding 27.77%, 182-day bills at 28.49%, and 364-day bills reaching 29.94%. These rises in yields reflect the current high-interest rate environment, which has made T-bills an attractive option for investors.
Since being locked out of international capital markets due to successive sovereign rating downgrades, the government has increasingly relied on T-bills for financing. This shift, alongside the cessation of the local debt market due to the December 2022 domestic debt exchange programme (DDEP), has made T-bills a key avenue for raising funds.
Looking ahead, Databank forecasts that the government will likely reduce its T-bill issuance by up to GH¢20 billion in 2025 as other financing sources open up. The incoming administration has already indicated a focus on fiscal consolidation, which could further reduce demand for short-term instruments, leading to a decrease in yields.
The Treasury’s upcoming offer on December 20, 2024, to raise GH¢5.56 billion through 91-day, 182-day, and 364-day bills reflects the market’s continued appetite for government securities. The planned issuance will also cover GH¢5.12 billion in maturing obligations, indicating a balanced response to investor demand.
In the secondary bond market, trading volumes surged dramatically from GH¢715 million to GH¢1.53 billion—a more than 100% increase compared to the previous week. The market showed concentrated interest in specific maturities, with February 2035 and February 2037 bonds accounting for 65% of the total trade volume. Longer-dated bonds between 2031 and 2038 captured 79% of market activity, with yields to maturity rising to 26%, reflecting a preference for longer-term investment instruments.
Analysts predict that yields for longer-dated bonds will remain elevated in the near term as investors seek higher returns amid the rising interest rate environment. The 2027-2030 maturity segment accounted for 21% of the turnover, with yields to maturity at 24%, showcasing a well-balanced investor strategy across different bond maturities.
These market developments highlight the strategic positioning of investors in anticipation of potential policy changes and further underscore the continued demand for government securities in a high-interest rate climate.
