The government fell short of its GH¢4.78 billion target at the latest treasury bill auction on Friday, raising only GH¢4.06 billion, which is 17.6% less than the goal.
Despite increasing the interest rates on the 182-day and one-year notes, the subscription remained low. The interest rate for the 91-day bill held steady at 24.78%, while the 182-day bill saw a slight increase to 26.74% from 26.71%. The one-year note’s rate inched up to 27.85% from 27.80%.
These rate hikes occurred even though the Monetary Policy Committee maintained the policy rate at 29%. The 91-day bill remained the most attractive option but contributed less to the total amount raised compared to previous auction results. For the first time in many trading weeks, it accounted for 59.1% of the total money borrowed. In contrast, investors responded positively to the increase in longer-dated instruments. The subscription for the one-year note, which typically hovers around 5% or below, accounted for 11.8% of the amount borrowed, while the 182-day bill accounted for 29.1% of the total funds raised.
Despite the improvement in patronage for the longer-dated bills, market watchers suggest that the trend indicates investors may be wary of the government’s risk profile, preferring shorter-term commitments over longer ones.
The decline in investor confidence aligns with recent findings from the Bank of Ghana’s surveys, which indicated a “softening of consumer and business sentiments.” This trend is also reflected in Ghana’s Purchasing Managers’ Index (PMI), which dropped below the 50.0 benchmark to 49.7 in June 2024, down from 51.6 in May, as highlighted in the latest Monetary Policy Committee report.
With the 91-day bill rate remaining unchanged for most of June and the policy rate holding steady, the Ghana Reference Rate is unlikely to see any changes in August.
