Government Misses T-Bill Target as Interest Rates Soar

The government once again failed to meet its treasury bills (T-bills) target at the latest auction, raising GH¢4.619 billion against a planned GH¢5.329 billion, representing a 13% shortfall. This undersubscription reflects continued weak investor appetite for T-bills as market players seek higher returns from alternative financial instruments.

Data released by the Bank of Ghana showed that the majority of bids concentrated on the shorter-term 91-day bill, which attracted GH¢3.74 billion. The medium-term 182-day bill received GH¢567 million in bids while the 364-day bill had GH¢309.3 million tendered. Notably, the government accepted all the bids submitted.

Despite this demand, investor sentiment towards the treasury market remains soft because the yields on T-bills have not kept pace with other available investments. This trend continues to challenge the government’s debt management efforts, with increased borrowing costs creating budgetary pressures.

In response to the market dynamics, interest rates rose across all bill maturities during the auction. The yield on the 91-day bill increased by 14 basis points to 10.81%, the 182-day bill yield climbed to 12.49% up from 12.30% the previous week, and the 364-day bill’s yield rose by 8 basis points to 12.95%. These increases signal rising costs for government borrowing and reflect investors’ demand for higher returns amid inflation concerns and tightening liquidity conditions. Financial analysts suggest that the government needs to review its debt strategy to attract more investors while managing the impact of rising interest rates on public finances. Meanwhile, the T-bill market will likely continue to face challenges as investors remain selective, favouring instruments with more attractive yields or less perceived risk.