T-bills undersubscribed as investors favour higher-yield alternatives
Weak demand for Treasury bills has persisted as institutional investors continue to channel funds into higher-yielding alternatives, including fixed deposits and repurchase agreements (repos).
Analysts say the shift is further compounded by the Bank of Ghana’s (BoG) Open Market Operations, which continue to attract strong investor interest.
Ahead of the 22 August 2025 primary auction, banks reportedly invested as much as GHS8.8 billion into BoG’s short-term bills, draining liquidity that might otherwise have supported the Treasury bill market.
Market watchers, including Databank Research, caution that the subdued participation trend is likely to continue in the near term.
“In the coming week, we expect investor participation to remain subdued amid modest yield compression,” the firm noted in its weekly market outlook.
At last week’s primary auction, the Treasury sought to raise GHS4.24 billion but attracted only GHS3.0 billion, representing a 35.7 percent undersubscription. Out of this, government accepted GHS2.73 billion, covering just 64 percent of maturities worth GHS3.84 billion that were due.
The undersubscription has raised concerns about government’s near-term financing prospects, though analysts say the current redirection of institutional funds is a key driver rather than outright investor apathy.
Despite the weak demand, yields on short-term bills softened slightly across all maturities. The 91-day bill declined by 6 basis points to 10.14 percent, while the 182-day and 364-day papers both dipped by 2 basis points to 12.23 percent and 13.08 percent, respectively, on a week-on-week basis.
Market analysts believe yield dynamics will continue to hinge on liquidity trends and institutional investor preferences, with the Treasury expected to face more pressure if competition from alternative instruments persists.
The next auction, scheduled under Tender 1969, is expected to test whether demand rebounds or remains suppressed as investors weigh risk-adjusted returns across competing assets.
