T-Bills Records 41% Oversubscription for Eighth Week, but at the Cost of Rising Rates
By Praisebell Rosemond Larbi
Ghana’s Treasury bills market has recorded an eighth consecutive week of oversubscription, underscoring sustained investor confidence in government securities, even as the cost of short-term borrowing continues to edge higher.
At last week’s auction, the government targeted a substantial GH¢7.15 billion, reflecting elevated financing needs and tighter fiscal planning. Investor demand, however, once again exceeded expectations. Total bids submitted amounted to GH¢10.09 billion, representing an oversubscription of about 41 per cent.
Out of the total bids received, the government accepted GH¢10.06 billion, raising approximately GH¢2.91 billion more than initially planned. Only a marginal GH¢28 million was rejected, highlighting the strong appetite for government paper across the market.
The sustained oversubscription trend has provided the Treasury with some breathing space, allowing it to meet near-term financing requirements, refinance maturing obligations, and manage cash flows more smoothly without resorting to emergency or ad hoc borrowing arrangements.
Strong demand across tenors
Investor interest was broad-based across all maturities on offer. The 91-day Treasury bill attracted bids worth GH¢2.8 billion, while the 182-day bill drew GH¢2.7 billion. The 364-day instrument once again dominated demand, recording GH¢4.6 billion in bids, suggesting growing investor willingness to lock in funds for longer tenors amid expectations of relatively stable macroeconomic conditions.
Market watchers note that the consistent demand for longer-dated bills reflects confidence in government securities and a belief that current yields remain attractive, particularly in the context of easing inflation and improving economic stability.
Oversubscription, but at a price
While the strong demand is a positive signal, it is not without cost. Interest rates rose across all instruments at the auction, reinforcing concerns that persistent oversubscriptions are gradually pushing borrowing costs upward.
The 91-day bill rate edged up from 11.1706 per cent to 11.1945 per cent. The 182-day rate increased from 12.6154 per cent to 12.6485 per cent, while the 364-day bill saw a more pronounced rise, climbing from 12.9021 per cent to 12.9807 per cent.
For investors, the upward movement in yields enhances returns and makes government securities increasingly attractive. For the government, however, higher rates translate into rising interest expenses over time, adding pressure to debt servicing obligations.
Implications for fiscal management
The eighth straight oversubscription signals continued confidence in government paper at a time when fiscal discipline and debt sustainability remain under close scrutiny. The ability to consistently raise more than targeted suggests that investors are still willing to fund government operations, even as yields trend upward.
However, analysts caution that this trend highlights a delicate balancing act. While oversubscriptions ease immediate financing pressures, sustained increases in interest rates could raise the long-term cost of borrowing, potentially crowding out expenditure on critical sectors such as infrastructure, healthcare, and social protection.
For now, Ghana’s Treasury bills market remains buoyant and dependable. The challenge ahead will be to sustain strong investor demand while preventing higher interest costs from becoming the next fiscal burden.
Meanwhile, the government is expected to return to the market this week with another ambitious target of GH¢9.8 billion, a test of whether investor appetite will remain as strong in the face of gradually rising yields.
