The government’s ambition of raising a specified amount on the T-Bills market suffered another setback as it failed to meet its required target.
This is the second consecutive week the government’s instrument has suffered an undersubscription after it enjoyed three consecutive weeks of oversubscription.
The bills, in the last two weeks, fell short by GH¢ 1.7 billion. The undersubscription continued last week, leading to another shortfall of GH¢ 1.2 billion after the auction.
The latest auction report published by the Bank of Ghana reveals that the government planned to borrow a total of GH¢ 4.2 billion. At the end of the auction, total bids submitted by investors amounted to GH¢3.01 billion. This led to the shortfall of GH¢1.2 billion, representing an undersubscription of 29%.
The 91-day bill garnered a total GH¢2.1 billion, while the 182-day bill also accumulated GH¢ 678 million. The 364-day bill accumulated GH¢272 million of the total bids.
Despite the shortfall, not all bids submitted by investors were accepted. Out of the total of GH¢ 3.01 billion submitted, the government accepted just GH¢2.7 billion, rejecting GH¢281 million.
But what one thing remained constant: the falling interest rate on the instruments. The interest rate of the 91-Day Bill declined from 10.2009% to 10.1374%, while that of the 182-Day Bill also recorded a drop from 12.2540% to 12.2302%.
The 364-Day bill also saw a decline from 13.1022% to 13.0865%.
Considering the consistent drop in the interest rate, it is highly likely that the target of the government to push the rate to a single digit will be achieved.
This will enable the government to borrow at a cheaper cost to fund its recurring expenditure without rapidly ballooning its public debt.
In the meantime, the government plans to raise a relatively ambitious amount of GH¢6.4 billion in its upcoming auction this week. Will the slow demand last week continue this week, or will there be a rebound?
Market watchers are closely monitoring the market to see if there will be a rebound or the moderate investor flight will continue.
