T-Bill Demand Falters as Auction Undersubscribed by 50% Despite Yield Decline
By Praisebell Rosemond Larbi
Investor demand for Treasury bills weakened further last week as the government’s primary auction fell significantly short of its target, underscoring persisting challenges in the short-term debt market.
Data released after the sale showed that investors tendered a total of GH¢3.5 billion across the 91-, 182-, and 364-day bills. The Treasury accepted GH¢3.39 billion, representing only half of the GH¢6.72 billion target an undersubscription of about 50 percent.
A breakdown of bids revealed that the 91-day instrument remained the most preferred, attracting GH¢2.05 billion in tenders, of which GH¢2.01 billion was accepted. The 182-day bill followed with GH¢1.14 billion in bids, of which GH¢1.12 billion was taken. The 364-day bill recorded the weakest interest, with GH¢321 million tendered and GH¢194 million accepted.
Despite the shortfall in subscription, yields across all three maturities edged lower, reflecting declining cost of borrowing for government. The 91-day bill dropped 9 basis points to 10.32 percent from 10.41 percent the previous week. The 182-day bill eased by 1 basis point to 12.37 percent, while the 364-day bill slipped by the same margin to 12.99 percent.
Market analysts attribute the consistent undersubscription partly to weak investor appetite, with some pointing to the availability of alternative investment options offering more attractive returns. However, others argue that the trend signals deeper concerns, including liquidity constraints among market participants and shifting investor sentiment about short-term government debt.
“The low uptake in recent auctions suggests that investors are weighing their options more carefully, especially as competing instruments present better yields relative to risk,” one market watcher observed.
Looking ahead, government has set a target of GH¢3.78 billion in the upcoming auction, a lower ambition compared to last week’s target, possibly in response to the soft demand.
With yields trending downward and subscription levels under pressure, market observers say the coming weeks will be crucial in determining whether the government can sustain its short-term borrowing program without significant adjustments to pricing or strategy.
