Ghana’s Treasury bill market has recorded its second consecutive undersubscription, deepening concerns about weakening investor demand as interest rates begin to rise again.
At the latest auction, the government targeted GH¢4.932 billion, but received bids totaling GH¢3.939 billion, resulting in an undersubscription of GH¢993.41 million, equivalent to 20.15% below target.
Out of the bids, the government accepted GH¢3.234 billion, falling significantly short of its target by GH¢1.698 billion, while still rejecting GH¢704.56 million in bids.
This is despite already missing its borrowing goal.
Demand Weakens Further
This marks the second straight week of undersubscription, a sharp reversal from the long stretch of oversubscriptions recorded in previous months.
The development signals that liquidity in the market may be tightening, or that investors are increasingly stepping back due to previously declining yields.
For weeks, falling interest rates reduced the attractiveness of Treasury bills. Now, even with rates beginning to rise again, investor participation appears to be recovering only slowly.
Government Remains Selective
Perhaps more telling is the government’s decision to reject a portion of bids despite falling short of its target.
This suggests that authorities are still unwilling to accept higher borrowing costs, choosing instead to prioritise cost control over volume, even in a weaker demand environment.
Yields Continue Upward Trend
Interest rates edged higher across all tenors, reinforcing the shift in market sentiment:
91-Day bill: increased from 4.7816% to 4.8117%
182-Day bill: rose from 6.3621% to 6.6214%
364-Day bill: climbed from 9.5828% to 9.7741%
The steady rise in yields indicates that the government may be gradually adjusting rates upward to attract investors back into the market.
Breakdown of Investor Appetite
Demand remained strongest at the short end. The 91-Day bill accumulated a total of GH¢2.6 billion of the total bids. The 182-Day bill also garnered a total of GH¢762.97 million, while the 364-Day bill also accumulated GH¢625.12 million.
However, overall participation across all tenors remained below expectations, reinforcing concerns about softening demand.
Implications for Government Financing
For the government, consecutive undersubscriptions pose a clear financing challenge. Unlike previous auctions, where excess liquidity allowed authorities to borrow comfortably and cheaply, the current environment suggests reduced access to domestic funding.
It also poses a potential pressure to offer higher interest rates and possible adjustments to borrowing plans.
If the trend continues, the government may be forced to either accept higher-cost bids, scale back borrowing, or explore alternative financing options.
