T-Bills: Investors Continue to Ditch Treasury Market as Interest Rates Surge

By Praisebell Rosemond Larbi

Investor appetite for Treasury bills continues to weaken despite the presentation of the 2026 Budget, signalling persistent uncertainty in the fixed-income market and ongoing hesitancy among market participants.

The latest auction results from the Bank of Ghana point to another shortfall in financing as investors continue to scale down their participation and demand higher yields to compensate for perceived risks.

For the most recent auction week, government targeted financing that ultimately fell short once again. A total of GH¢3.94 billion was tendered across the three maturities. However, the government accepted GH¢3.83 billion of the bids, lower than the target and further evidence that demand continues to trail its financing needs. Analysts say the shortfall suggests liquidity constraints in the market and reduced confidence in short-term government securities, despite Treasury bills remaining a key source of domestic financing.

The 91-day bill continued to dominate market demand, attracting a little over 77 percent of total bids. Investors tendered approximately GH¢3 billion for this tenor, out of which government accepted GH¢2.9 billion. Market analysts note that the heavy concentration on the shortest-term paper reflects investor preference for minimal exposure amid uncertainty regarding interest rate direction, inflation trends, and government’s medium-term borrowing needs.

The 182-day maturity also saw moderate activity, recording bids of GH¢613.2 million, with GH¢608.2 million accepted. The 364-day bill remained the least patronised, attracting GH¢257.1 million in tenders, out of which government accepted about GH¢254 million. The weak demand for the longest-dated instrument, according to market watchers, shows that investors are increasingly reluctant to lock in their liquidity for a year, especially in a market where yields remain volatile and inflation expectations are far from anchored.

Meanwhile, interest rates continued their upward trajectory on the yield curve, suggesting that investors are demanding higher returns to absorb government debt. The 91-day T-bill rose by 10 basis points to 11.02 percent, reflecting sustained upward pressure. The yield on the 182-day bill also climbed, rising to 12.66 percent from 12.61 percent the previous week. In contrast, the 364-day bill saw a marginal decline of 7 basis points to 13.08 percent, although analysts say the drop is too small to suggest a reversal in trend.

Economists argue that the continued sell-off reveals deeper concerns beyond weekly auctions. The upward shift in T-bill rates suggests that borrowing costs will keep rising unless investor confidence strengthens and liquidity improves across the financial market. They add that the weak subscription pattern, despite the unveiling of the 2026 Budget, indicates that investors are waiting for clearer signals on government’s fiscal path, debt sustainability strategy, and medium-term macroeconomic stability. With Treasury bills remaining the government’s primary tool for raising short-term funds, sustained investor disengagement could force further rate increases, potentially escalating the cost of borrowing and increasing domestic debt servicing pressures. Market analysts say the coming weeks will be critical as investors digest the budget details and reposition ahead of expected monetary and fiscal policy announcements.