Ghana’s Treasury bill market has recorded its fifth consecutive undersubscription, extending a worrying trend of weakening demand, even as interest rates continue to inch upward.
At the latest auction, government targeted GH¢4.890 billion but received bids totaling GH¢4.489 billion, resulting in a mild undersubscription of GH¢401.45 million, equivalent to 8.21% below target.
Out of the bids submitted, government accepted GH¢4.090 billion, leaving a shortfall of GH¢799.70 million, while still rejecting GH¢398.25 million in bids, despite failing to meet its borrowing goal.
Demand Still Soft, But Stabilising
Although this marks the fifth straight undersubscription, the lower deficit compared to previous auctions suggests that demand may be stabilising, albeit at a weaker level than earlier in the year.
The shift reflects a market that is becoming more cautious, with investors possibly reassessing their positions after months of falling yields.
Even in the face of weaker demand, government remained selective, rejecting a portion of bids rather than accepting all to meet its target. This signals a continued focus on controlling borrowing costs, avoiding expensive bids that could worsen debt servicing pressures.
Interest Rates Continue to Rise
Yields recorded another slight increase across all tenors:
91-Day bill: rose from 4.9106% to 4.9480%
182-Day bill: increased from 6.7760% to 6.9099%
364-Day bill: climbed from 9.9788% to 10.1283%
The steady uptick suggests that government is gradually adjusting rates to attract investors, though the response has been modest so far.
Demand Across Tenors
Investor appetite remained strongest at the short end:
The 91-Day bill accumulated a total of GH¢2.6 billion of the total bids. In addition, the 182-Day bill raked in GH¢771.16 million, while 364-Day bill also brought in GH¢1.2 billion.
The improved interest in the 364-day bill may indicate some renewed confidence at the longer end, even as overall demand remains below target.
Implications for Government
For government, five consecutive undersubscriptions highlight a more constrained financing environment. This means less access to easy domestic funding, potential pressure to raise interest rates further, and greater need for careful cash and debt management.
If the trend persists, authorities may need to rethink borrowing strategies or look for alternative funding sources.
After a long period of strong liquidity and oversubscription, the T-bill market is clearly undergoing a rebalancing phase. The combination of gradually rising yields and improving, but still insufficient, demand suggests that the market is adjusting to new conditions.
