Ghana’s Treasury bill (T-Bill) market was awash with liquidity last week, with investors offering nearly twice what the government sought to raise.
This massive rush for the government papers was not even deterred by the significant drop in yield rate across all three tenors.
The latest auction result published by the Bank of Ghana (BoG) reveals that the government targeted GH¢5.993 billion but received a staggering GH¢11.280 billion in bids, producing an 88.2% oversubscription worth GH¢5.287 billion. Yet, in a striking display of selectivity, the Treasury accepted only GH¢4.882 billion and rejected GH¢6.398 billion. This represents a massive 56.7% of all bids submitted.
More strikingly, the government fell GH¢1.112 billion short of its target, despite investors offering GH¢5.287 billion more than it wanted to borrow. The numbers point to exceptionally deep liquidity in the domestic market, but also suggest that the Treasury was unwilling to accept available funds at the terms investors were offering.
Demand was spread across the market, with the 91-day bill attracting GH¢5.1 billion in bids, the 182-day bill receiving GH¢1.3 billion and the 364-day instrument drawing GH¢4.9 billion. The relatively balanced demand across the short and long ends underscores the breadth of investor appetite for government securities.
The surge in demand came despite a broad decline in yields. The 91-day rate fell from 5.6289% to 5.4682%, while the 182-day rate dropped from 7.5265% to 7.2720%. The biggest movement came at the long end, where the 364-day rate fell for the first time in several weeks, declining sharply from 12.9864% to 12.5000%.
For the government, falling yields are good news because they potentially reduce the cost of borrowing and refinancing maturing debt. However, the decision to reject more than half of available bids while falling short of its target suggests the Treasury is prioritising the price of borrowing over simply raising more cash.
For investors, the auction shows their willingness to commit GH¢11.280 billion despite lower returns, which points to strong demand for the relative safety and predictability of government securities. It also suggests that substantial liquidity remains available within Ghana’s financial system, with investors competing for fewer attractive assets.
If sustained, this combination of deep liquidity and declining yields could provide the Treasury with increasingly favourable financing conditions, while signalling that investors may be accepting lower returns as competition for safe domestic assets intensifies.
