In an interesting turn of events, the government has missed its treasury bill borrowing target after a massive rebound following a generally peaceful parliamentary and presidential elections.
After the government exceeded its target massively by close to 20% last two weeks, it recorded a very marginal undersubscription last week by a paltry 1.06%.
The Bank of Ghana auction for the government’s short-term instruments for last week reveals that the state planned to borrow an amount of GH₵ 5.46 billion to fund its expenditure. After the auction, the government was able to accrue a total of GH₵ 5.40 billion leading to a shortfall of GH₵ 58.1 million. This shortfall represents just 1.06% of the target anticipated by the government.
This marginal shortfall in the government’s target was recorded despite the consecutive hike in interest rates on the short-term instruments.
All bids tendered were accepted as a significant part of the bids accepted came from the 91-Day bills. A little over GH₵ 4.03 billion came from this bill representing 74.5% of the total bids accepted.
The 182-Day bill also mobilized GH₵ 867.34 million representing 16.05% of all bids accepted while the 364-Day bill also managed to accrue GH₵ 508.61 million representing 9.41% of the total bids.
However, interest on the bills continued its upward trend. The yield on the 91-day bill increased from 27.774% to 27.852%. The 182-Day bill also increased from 28.316% to 28.573% while the yield on the 364-Day bill also surged from 29.943% to 29.957%.
Although there was a very marginal undersubscription, it is very early to conclude that the massive investor rebound recorded two weeks ago has waned down. It however unclear the cause of this paltry shortfall.
The government was able to accrue 98.92% of its target which signifies a good performance. However, these bills came at the expense of rising interest rates which has the potential to worsen the country’s debt overhang. This is because the high interest rates offered by the government automatically translate into high repayment costs when these short-term bills mature.
Meanwhile, the government has planned to raise GH₵ 4.3 billion next week. Analysts are watching to see whether the investor rebound experienced two weeks ago will be regained or the government will face another consecutive undersubscription.
