Demand for T-bills drops despite lower yields

By Praisebell Rosemond Larbi

The Government’s latest treasury bills auction ended in undersubscription for the first time in nearly three weeks, despite a drop in interest rates across all maturities.

According to data from the Bank of Ghana, the auction held on Friday, 8 August 2025, raised approximately GHS6.8 billion, falling short of the targeted GHS8.58 billion by about GHS1.78 billion.

This shortfall marks a reversal from recent weeks when bids consistently exceeded targets, pointing to a potential shift in investor appetite.

The 91-day bill once again attracted the lion’s share of bids, underscoring the market’s preference for short-term maturities.

Investors tendered a little over GHS5.02 billion for the three-month paper, representing about 72.9 percent of total bids, with the government accepting GHS4.99 billion.

For the medium-term 182-day bill, bids amounted to GHS1.372 billion, of which GHS1.237 billion were accepted.

In the case of the 364-day bill, investors tendered GHS490.41 million, with the government accepting GHS452 million.

Yields on all tenors trended downward. The 91-day bill’s rate dropped by 9 basis points to 10.20 percent, continuing its gradual decline from recent highs.

The 182-day bill saw a steeper fall, slipping from 12.35 percent to 11.54 percent. The one-year bill also edged down by 14 basis points, settling at 13.10 percent.

Market analysts say the undersubscription, despite falling yields, could be linked to liquidity pressures in the banking sector or competing investment opportunities in the private market.

Others note that the lower interest rates may have made the bills less attractive to yield-seeking investors, particularly in an inflationary environment where real returns are already compressed.

Treasury bills remain a critical instrument for government financing, especially for short-term debt management.

The drop in yields, analysts say, reflects the government’s attempt to reduce the cost of borrowing and consolidate fiscal gains under the ongoing debt restructuring programme.

However, sustained undersubscription could put pressure on financing plans and force adjustments to future auction strategies.

The government is expected to return to the market next week with another round of auctions across the 91-day, 182-day and 364-day maturities.