T-bill shortfall widens despite heavy bidding as government rejects high rates on 364-day bill

By Emmanuel Boateng

GH¢7.5bn target misses by wide margin; only GH¢100.99m accepted for 1-year bill as investor demands test rate ceiling

Ghana’s domestic debt market suffered a deep funding shortfall last week, as the government failed to raise even two-thirds of its record GHS7.525 billion target in Tender 1963. Despite receiving GHS6.13 billion in bids across three tenors, only GHS4.54 billion was accepted, leaving a yawning gap of nearly GHS3 billion and raising urgent questions about the sustainability of current interest rate suppression.

The July 11 auction marks the seventh consecutive week of underperformance, and its scale has sharpened concerns among analysts and investors. While short-term instruments remained oversubscribed in volume, the 364-day bill, the market’s traditional measure of long-term investor confidence, was where the deepest dislocation occurred.

Although the government received GHS1.6 billion in bids for the 364-day bill, only GHS100.99 million was accepted, representing a meagre 6.3 percent acceptance rate. At face value, this might suggest weak investor interest but a closer look at the bid data reveals the opposite. Investors were willing to lend, but at significantly higher rates than the government was prepared to pay. The highest bid on the 364-day bill reached 16.67 percent, while accepted bids were confined to a narrow band between 13.04 percent and 13.64 percent, resulting in a weighted average yield of 15.42 percent. The government’s refusal to accept the majority of tenders underscores a strategic ceiling on rates, one that may now be colliding with market expectations.

What we’re seeing is not a lack of demand, but a pricing standoff. Investors are bidding, but they want to be properly compensated for holding one-year bill in an environment of fiscal uncertainty and a still-elevated policy rate. Indeed, Ghana’s Monetary Policy Rate remains at 28 percent, and while inflation has eased to 13.7 percent as of June 2025, real returns on Treasury bills remain slim or negative. The 91-day yield ticked up slightly to 14.66 percent, and the 182-day bill rose to 15.03 percent, yet these adjustments fall short of what many institutional investors see as adequate for the risk.

The result is a flattening yield curve and a retreat from longer-term instruments, forcing the government into a tighter cycle of short-term borrowing and refinancing. With rollovers mounting and multilateral disbursements tied to structural performance benchmarks, the fiscal space to absorb these shortfalls is narrowing.

In this context, the government’s strategy of rate containment is beginning to show diminishing returns. Accepting almost all bids on the 91- and 182-day tenors brought in GHS4.44 billion combined, but was not enough to bridge the overall gap. The sharp drop in 364-day acceptance, despite high bidding volume, may be the clearest signal yet that investors are demanding a risk premium the government is unwilling to pay.

Market watchers warn that unless rates are allowed to adjust more flexibly, the Treasury’s ability to meet its funding needs will remain compromised. Some analysts have called for a gradual yield reset, particularly on the 182- and 364-day instruments, to re-anchor market confidence without triggering runaway borrowing costs. Others suggest improved forward guidance and debt strategy communication could reduce market uncertainty and help moderate rate pressures organically.

Looking ahead, the government has slashed this week’s target for Tender 1964 to GHS5.436 billion, a sharp decline from last week’s figure. Whether this move will help restore balance or reflect deepening liquidity constraints will depend on how the Ministry of Finance recalibrates its stance in the coming days.

With inflation on a declining path and monetary conditions remaining tight, the government finds itself walking a narrow policy corridor; caught between the optics of debt affordability and the realities of market appetite. For now, the message from the 364-day bill is loud and clear: investors want to lend, but only at a price the government is not yet willing to pay.

Tender 1963 Results (July 11, 2025):

• Target: GHS7.525 billion
• Total Bids Received: GHS6.126 billion
• Total Accepted: GHS4.539 billion
• 91-day yield: 14.6596 percent
• 182-day yield: 15.0289 percent
• 364-day yield: 15.4192 percent
• Inflation (June 2025): 13.7 percent
• Monetary Policy Rate: 28 percent
• Next Week’s Target (Tender 1964): GHS5.436 billion