Ghana’s Treasury bill market has recorded its first undersubscription in four months, snapping about a streak of 16 consecutive oversubscriptions.
This is also signalling a possible shift in market dynamics.
At last week’s auction, the government aimed to raise GH¢5.005 billion, but received bids of only GH¢3.731 billion, resulting in an undersubscription of GH¢1.274 billion, equivalent to 25.45% below target.
Out of the bids received, the government accepted GH¢3.266 billion, falling further short of its target by GH¢1.739 billion, while rejecting GH¢465.59 million in bids.
Demand Weakens After Months of Strong Liquidity
The development marks a notable turnaround in the T-bill market, which had seen persistent oversubscriptions driven by strong liquidity in the banking sector.
The latest outcome suggests that liquidity may be tightening, or that investors are beginning to pull back due to declining yields in recent months.
For weeks, falling interest rates made Treasury bills less attractive compared to other potential investment options, possibly prompting some investors to stay on the sidelines.
Government Still Rejects Some Bids
Interestingly, even though the auction fell short of its target, the government did not accept all bids submitted, rejecting about GH¢465.59 million.
This suggests that authorities are still selective about the rates they accept, prioritising cost control over meeting borrowing targets at any price.
Yields Edge Up Slightly
In a sign of changing market conditions, interest rates recorded a marginal uptick across all tenors:
91-Day bill: increased from 4.7100% to 4.7816%
182-Day bill: rose from 6.2833% to 6.3621%
364-Day bill: climbed from 9.4061% to 9.5828%
The rise in yields may reflect the government’s attempt to attract more investor interest, or a market-driven response to reduced demand.
Breakdown of Bids
Demand was concentrated at the short end of the market.
The 91-Day bill accumulated a total of GH¢2.2 billion. The 182-Day bill also accumulated a total of GH¢667.12 million.
The 364-Day bill was also able to garner a total of GH¢831.41 million
The relatively lower participation across all tenors reinforces concerns about softening demand.
What This Means for Government
For the government, the undersubscription presents a new fiscal challenge. While previous oversubscriptions allowed authorities to borrow comfortably and even reject expensive bids, the current outcome means less access to domestic financing than planned.
If the trend persists, the government may have to accept higher interest rates to attract investors, adjust borrowing strategies, or explore alternative financing sources.
