T-bill auction bounces back after weeks of low demand

The Treasury bill market recorded an oversubscription for the first time in two months during last week’s primary auction, with investor demand rising sharply, nearly doubling the government’s target.

According to the latest data from the Bank of Ghana, the auction drew total bids amounting to GHS 20.98 billion.

Out of this, the Treasury accepted GHS 10.64 billion, enough to cover both its initial target of GHS 5.44 billion and maturing obligations of GHS 5.24 billion.

This strong performance signals renewed investor confidence in short-term government securities, following several weeks of subdued activity in the T-bill market.

The 91-day bill received the highest interest, attracting GHS 13.77 billion in bids, of which GHS 5.65 billion was accepted.

The 182-day bill followed, pulling in GHS 4.22 billion in bids, with GHS 2.99 billion accepted. For the 364-day bill, the Treasury accepted GHS 2.00 billion out of a total GHS 2.98 billion in bids.

Analysts attribute the surge in demand to a recent significant reduction in interest rates on the Bank of Ghana’s policy instrument, known as the BoG Bills, which until recently yielded 27 percent.

With the sharp drop in returns on those instruments, many investors are redirecting funds into Treasury bills, which continue to offer relatively higher and more stable returns.

Despite the strong demand, yields on short-term securities declined across all tenors.

The 91-day yield dropped by 93 basis points to 13.72 percent, while the 182-day bill saw its yield fall by 41 basis points to 14.61 percent, down from 15.02 percent. The 364-day bill also declined, with its yield falling by 68 basis points to 14.73 percent.