The government, for the second consecutive week, has missed its Treasury bill (T-bill) borrowing target raising concerns of a possible decline in investor confidence.
The second week of failing to meet its target comes after several weeks of oversubscription, leading to massive rejection. In the past two weeks the government has been struggling to meet its target despite relatively lower targets compared to past weeks with significantly higher targets but was still oversubscribed.
The latest auction results published by the Bank of Ghana reveal that the government missed its target by a little over GH¢ 1.53 billion.
The state planned to borrow a total of GH¢ 5.6 billion. By the end of the auction, the total bids amounted to GH¢ 4.7 billion, representing an undersubscription of 16.55%. Despite failing to meet its target, the government only accepted just GH¢ 4.1 billion, rejecting about GH¢ 596 million.
The yield on the three instruments continued to the downward trend.
The 91-day bill saw a decline from 15.7353% to 15.7108%. The 184-day bill also reduced from 16.9265% to 16.7330%, while the 364-day bill followed suit with a marginal decline from 18.8494% to 18.8449%.
The consecutive undersubscriptions have started raising concerns about the much-touted investor confidence by the Minister of Finance, Dr. Cassiel Ato Forson, during the presentation of the 2025 Budget Statement and Economic Policy to Parliament.
Should the trend of undersubscription of the T-bills continue, then the government is at risk of financing its activities since there is currently no alternative source of financing. The bonds market has been suspended while the government has been pushed out of the international capital market.
It is quite unclear if the continued decline in the interest rate of the T-bills is the cause of the investor flight. The subsequent weeks will paint a clear picture of the market.
Meanwhile, the government has planned to borrow a moderate amount of GH¢ 4.4 billion in the next auction.
