Investor Demand for Treasury Bills Remains Strong as Yields Drop to 4.8%
By Praisebell Rosemond Larbi
Investor appetite for short-term government securities remained strong at the latest treasury bills auction, even as interest rates continued their downward trend.
According to auction results released by the Bank of Ghana, demand for the Government of Ghana’s treasury bills significantly exceeded expectations, highlighting continued investor confidence in short-term government instruments.
The government had targeted GH¢5.67 billion from the auction but received bids totaling GH¢10.77 billion, representing an oversubscription of approximately 89.7 percent. Out of the total bids submitted by investors, the government accepted GH¢6.13 billion.
91-Day Bill Dominates Demand
The 91-day treasury bill attracted the highest level of investor interest. Bids totaling GH¢5.21 billion were submitted for the instrument, accounting for about 48 percent of total bids tendered at the auction.
However, the government accepted GH¢3.4 billion of those bids.
The 364-day bill also saw strong participation from investors. Bids worth GH¢3.59 billion were tendered, with the government accepting GH¢1.72 billion.
Meanwhile, the 182-day bill recorded bids of approximately GH¢1.95 billion, out of which GH¢946 million was accepted.
Interest Rates Continue to Decline
Despite the strong demand, yields on treasury bills continued to fall across the yield curve, reflecting the government’s improving financing conditions and growing investor confidence.
The yield on the 91-day bill dropped by 50 basis points to 4.82 percent, continuing its downward trajectory in recent weeks.
Similarly, the yield on the 182-day bill declined to 6.30 percent, down from 6.87 percent recorded in the previous week.
The 364-day bill also recorded a reduction in yields, falling by 42 basis points to 9.34 percent.
Market Signals Improving Investor Confidence
The sustained demand for treasury bills comes shortly after the government signaled its intention to return to the primary bond market later this year, following a prolonged absence during the country’s debt restructuring process.
Market analysts say the continued oversubscription of treasury bill auctions suggests that investors remain confident in short-term government securities despite the decline in interest rates.
The falling yields also reflect improving liquidity conditions in the financial system and a gradual normalization of the domestic debt market.
Outlook for the Treasury Market
Analysts believe that if current trends continue, treasury bill rates may decline further in the coming months as the government stabilizes its financing strategy and macroeconomic conditions improve.
However, the government will likely continue to rely heavily on short-term instruments such as treasury bills to meet its financing needs while preparing for a broader return to longer-term domestic borrowing.
The strong participation in the latest auction indicates that treasury bills remain an attractive investment option for banks, institutional investors, and individuals seeking relatively safe short-term returns in Ghana’s financial market.
