T-bills auction misses target by 55%
By Praisebell Rosemond Larbi
The government’s latest treasury bills (T-bills) auction recorded a major shortfall, with bids falling short of the target by 55 per cent, the biggest undersubscription so far this year.
According to the Bank of Ghana’s auction summary, the government aimed to raise GHS6.57 billion from the sale of short-term securities but secured only GHS2.92 billion in bids. Of this amount, it accepted GHS2.08 billion, reflecting weak investor participation compared with the strong demand recorded in recent weeks.
The undersubscription contrasts sharply with last week’s 23 per cent oversubscription, signalling a possible shift in market sentiment as investors adjust to tightening liquidity conditions and expectations of rising interest rates.
A breakdown of the auction results shows that the 91-day bill continued to dominate investor demand, accounting for 71.2 per cent of total bids.
Out of GHS2.085 billion tendered for the three-month paper, GHS2.080 billion was accepted. For the 182-day bill, total bids amounted to GHS704.6 million, with GHS699 million accepted.
Meanwhile, the 364-day bill attracted GHS136.5 million in bids, of which GHS110 million was accepted.
The shortfall in total bids has been attributed to tightening liquidity in the banking sector and the preference of some investors for alternative instruments amid rising inflation expectations. Analysts also believe that the sharp appreciation of the cedi in recent weeks may have altered short-term yield expectations among institutional investors.
In line with the undersubscription, interest rates edged upward across all tenors, reflecting the government’s higher cost of borrowing.
The 91-day bill rose by 16 basis points to 10.69 per cent, while the 182-day bill increased to 12.43 per cent from 12.30 per cent the previous week. The 364-day bill also gained 5 basis points, settling at 12.92 per cent.
