Interest rates are expected to remain elevated due to increasing demand for liquidity in the short-term market. This trend is likely to impact Treasury Bills Yields as well.
The yield on the treasury bills hit the 30% mark last Friday, December 27, 2024. This indicates a significant relationship between interest rates and treasury bills.
The rise in yields and bids for T-bills reflects investors’ strong desire to lock in at a higher interest rate, particularly because of declining real returns and liquidity constraints generally associated with interest rates and treasury bills.
Last week, the government accepted total bids of GH¢4.65 billion, exceeding its target and upcoming maturities of GH¢4.26 billion and GH¢3.28 billion, respectively.
Yields rose, with the 91-day increasing by 18 basis points to 28.04%, while the 182-day and 364-day bills rose by 11 basis points each, settling at 28.68% and 30.07%, respectively. This further underscores the current trends in interest rates and treasury bills.
In November 2024, the government received GH¢21.5 billion of T-bills auctioned.
This fell short of the gross target of GH¢22.8 billion.
The government allotted all bids to exceed the refinancing obligation by 8.3%. However, it fell short of the target by 5.5% with a sustained risk of the uncovered auction in December 2024 as the refinancing obligation jumped to GH¢26.1 billion.
Investor demand for the T-bills increased by 27.2% month-on-month but remained insufficient to fully cover the high auction target for the month under review.
Unsurprisingly, yields remained on the uptrend, averaging 90 basis points (bps) across the T-bills with renewed near-term inflation uncertainty and persistent Treasury borrowing pressure as the main drivers for movements in interest rates and treasury bills.
Source: Myjoyonline
