T-Bill Auction Rebounds After Six Week Slowdown

Ghana’s treasury market saw a strong comeback this week after six straight weeks of low investor activity. New data from the Bank of Ghana shows that Treasury bills were heavily oversubscribed, recording about 111% subscription. This means investors showed renewed confidence in short-term government securities.

According to the auction results, investors offered GH¢6.03 billion across the 91-day, 182-day, and 364-day Treasury bills. Out of this amount, the government accepted GH¢5.78 billion, which is almost twice the initial target of GH¢2.86 billion for the week. This sharp rise in demand marks one of the strongest auction performances in recent weeks.

The breakdown shows that the 91-day bill remained the most preferred by investors. It attracted GH¢2.57 billion in bids, with GH¢2.56 billion accepted. The 182-day bill followed, recording GH¢1.64 billion in total bids, out of which GH¢1.62 billion was accepted. The 364-day bill also gained strong attention, receiving GH¢1.81 billion and accepting GH¢1.58 billion.

A major factor behind this turnaround is the recent 350-basis-point cut in the Bank of Ghana’s policy rate, bringing it down to 18%. The cut reduced returns on the Central Bank’s 56-day bill, making Treasury bills more attractive to banks and other institutional investors. With lower rates elsewhere, many investors redirected their funds into Treasury bills, increasing demand significantly.

Market analysts say the smaller issuance target for the week also helped push the oversubscription numbers higher. When fewer bills are offered, demand usually appears stronger compared to the available supply.

Interest rates, or yields, on the bills adjusted slightly after the auction. The 91-day bill rate dropped to 11.05%, down by 8 basis points. The 182-day bill saw a bigger drop of 25 basis points, bringing its rate to 12.43%. The 364-day bill, however, recorded a slight increase of 2 basis points, pushing its rate to 13.08%.

Financial experts say the moderation in yields suggests that the government is gradually gaining more control over borrowing costs as investor confidence improves. A stable cedi and a calmer inflation outlook may also be helping to attract more buyers into short-term government securities.

Looking ahead, the Treasury plans to raise GH¢5.80 billion in its next auction across the same three maturities. Market watchers will be observing whether the strong demand continues and if yields remain stable in the coming weeks.