T-bills: Govt falls short of target for second consecutive time
The government has once again missed its Treasury bill target, falling short by GH¢1.5 billion.
According to the latest data from the Bank of Ghana (BoG), the government aimed to raise GH¢5.64 billion from short-term instruments but received bids totaling GH¢4.11 billion, resulting in an undersubscription of 27.1%. Despite this, authorities rejected GH¢595 million in bids.
For the 91-day Treasury bill, GH¢3.5 billion was tendered, with GH¢3 billion accepted. The 182-day bill saw full acceptance of GH¢582.87 million in bids. Meanwhile, GH¢619 million was tendered for the 364-day bill, but only GH¢500 million was accepted.
Interest rates on Treasury bills remain between 15% and 18%. The 91-day bill dipped by two basis points to 15.71%, while the 182-day bill fell by 20 basis points to 16.73%. The 364-day bill remained unchanged at 18.85%.
This development comes after the Bank of Ghana decided to raise the policy rate by 100 basis points from 27% to 28%.
The persistent undersubscription raises questions about market appetite and liquidity conditions.
Market watchers attribute the undersubscription to the Treasury’s delicate balance of rejecting high-rate bids while facing dwindling investor offers. They expect tighter money market liquidity in the coming weeks with the BoG’s expected 273-day bill likely to absorb more institutional offers, thereby increasing pressure on the Treasury if liquidity buffers weaken.
They believe the MPC’s rate hike and liquidity-tightening measures will likely cause short-term interest rates to re-adjust upwards in the coming months, contingent on the strength of the Treasury’s buffers and the timing of the proposed bond market reopening for long-dated issuances. Both nominal and effective interest rates will likely adjust upwards, potentially tightening credit growth. In the next auction, the Treasury aims to raise GH¢4.39 billion.
