T-bills: Databank warns of prolonged strain as funding pressures mount
By Praisebell Rosemond Larbi
Databank Research is cautioning that Ghana’s Treasury bill market is set for a prolonged period of strain as funding pressures intensify and government struggles to meet its short-term borrowing targets. The investment research firm says the coming weeks are likely to keep yields elevated, driven by tight market liquidity, weak bid volumes and large rollover requirements facing the Treasury.
According to Databank, indicators from the 2026 Budget suggest that the government will rely even more heavily on short-term securities to rebuild cash buffers and manage its financing gaps. Analysts say this approach, while necessary, risks placing additional upward pressure on yields unless liquidity improves substantially.
“The continued dependence on T-bills for near-term financing could push yields further above current levels. The pace of adjustment will depend largely on the Monetary Policy Rate (MPR) trajectory and the broader liquidity environment,” the firm noted. With liquidity still constrained and investors demanding greater compensation for lending to government at short tenors, short-term financing is expected to remain comparatively expensive.
The warning follows yet another underwhelming auction performance last week. The Treasury mobilised GH¢3.83 billion, falling 30.46% short of its GH¢5.68 billion target. The significant shortfall underscores the persistent tightening in money-market conditions as well as investors’ growing reluctance to commit to T-bills at current yields.
Market watchers say the missed target also signals heightened caution among banks and institutional investors, many of whom are managing balance-sheet pressures stemming from elevated interest rates and liquidity reserve requirements.
Despite the weak performance, yields continued their upward climb across all maturities as the government increased rates in an attempt to attract more bids. Analysts warn that this dynamic, missed targets leading to higher yields, followed by further funding pressure, could keep the government trapped in a cycle of costly short-term borrowing over the near term.
Databank emphasises that while the government’s reliance on T-bills is understandable given ongoing fiscal pressures, sustained strain in the market could complicate its financing strategy heading into 2026. Unless liquidity conditions improve significantly, treasury operations may face continued volatility, with higher yields feeding into broader budgetary pressures.
Analysts conclude that the combination of lower-than-expected bids, rising yields, and heavy rollover obligations points to a “challenging stretch” ahead for short-term debt management, one that will require tighter coordination between fiscal authorities and the central bank to stabilise the market.
