T-Bills: Investor demand in sharp decline
Story: By Isaac AIDOO, Accra
INVESTOR demand for treasury bills saw a sharp decline last week as the government raised GH₵4.77 billion, falling significantly short of its GH₵7.44 billion target.
The 35.9% under-subscription rate is a clear sign of diminished investor confidence, signalling broader concerns within the economic environment.
The rise in yields, with the 91-day bill climbing to 25.64%, the 182-day bill reaching 26.92%, and the 364-day bill rising to 28.68%, reflects the growing risk premium that investors are demanding to hold government securities in an uncertain macroeconomic climate.
Despite the lower-than-expected subscription, the government accepted all bids for the 91-day, 182-day, and 364-day treasury bills. This highlights the increasing reliance on short-term domestic borrowing to manage liquidity and fiscal gaps.
However, this strategy, though necessary in the short term, may further strain public finances as the higher yields will eventually translate into larger debt servicing costs.
In the Ghana fixed income market, trading volumes increased by 4.7% to GH₵3.56 billion, largely driven by treasury bills, which accounted for 88.15% of the total market volume.
New government notes and bonds contributed 9.84%, while corporate bonds made up a mere 1.2%. This skewed trading pattern reflects investors’ continued preference for government-backed securities over corporate instruments, likely due to the perceived risks in the private sector amid economic uncertainties.
The Ghanaian cedi also faced pressure, depreciating by 0.47% against the US dollar, 1.08% against the British pound, and 0.45% against the euro. The cedi closed the week at GH₵15.83 per dollar, GH₵21.21 per pound, and GH₵17.68 per euro.
The cedi’s continued weakness underscores the challenges the country faces in managing external balances, with rising import costs and external debt payments weighing heavily on the local currency.
On the Ghana Stock Exchange, the GSE Composite Index saw a marginal decline of 0.04%, as share prices of financial institutions such as Access Bank, Cal Bank, GCB, and MTN Ghana dropped.
However, gains from Standard Chartered Bank, Enterprise Group, Unilever Ghana, and New Gold helped cushion the overall market. The market’s year-to-date appreciation now stands at 39.93%, and financial and ICT sector stocks are expected to drive performance in the coming weeks. Overall, Ghana’s financial markets continue to navigate challenging terrain, with investor caution apparent across multiple asset classes. The government’s ability to address fiscal imbalances, restore investor confidence, and stabilize the cedi will be critical in reversing these trends.
