T-Bills Interest Rates Drop to 8.6%

Investor appetite for short-term government securities strengthened significantly, as Ghana’s latest treasury bills auction recorded a massive 253 percent oversubscription, underscoring growing confidence in the domestic fixed income market.

According to auction results released by the Bank of Ghana, total bids reached over GH¢22.6 billion, far exceeding the government’s target. However, authorities exercised tight demand management by rejecting approximately GH¢13 billion of the bids, ultimately accepting GH¢8.9 billion.

The strong demand reflects increased liquidity in the financial system as well as renewed investor preference for relatively safe and predictable returns offered by government instruments amid improving macroeconomic conditions.

Breakdown of the auction shows that the 364-day bill continued to dominate investor interest. A total of GH¢7.7 billion was tendered for the one-year instrument, representing 34.2 percent of total bids. Out of this, GH¢3.4 billion was accepted.

The 91-day bill also saw substantial participation, attracting GH¢7.6 billion in bids, with GH¢3.4 billion accepted. Similarly, the 182-day bill recorded GH¢7.2 billion in bids, of which slightly over GH¢3 billion was taken up.

Despite the high demand, interest rates declined sharply across all tenors, signaling easing borrowing costs for government and reflecting broader disinflation trends in the economy.

The yield on the 91-day bill dropped significantly by 136 basis points to 8.60 percent. The 182-day bill rate also declined to 10.67 percent from the previous 11.81 percent, while the 364-day bill eased by 100 basis points to settle at 11.06 percent.

The decline in yields suggests that government is increasingly able to borrow at lower costs, a development that could ease pressure on public debt servicing and support fiscal consolidation efforts.

Market analysts say the strong oversubscription also points to limited alternative investment options in the short term, with investors particularly banks and institutional players, continuing to channel excess liquidity into government securities.

The development comes at a time when Ghana’s inflation has eased considerably and monetary conditions have begun to stabilise, creating room for lower interest rates across the financial markets.

However, analysts caution that sustained declines in yields will depend on continued macroeconomic stability, fiscal discipline, and exchange rate management.

Overall, the auction outcome reinforces confidence in Ghana’s money market, while highlighting the government’s improved ability to manage domestic borrowing efficiently without exerting upward pressure on interest rates.