In the latest treasury bill sale, investors showed reluctance to meet the government’s borrowing needs, leading to a significant shortfall. The government sought to borrow GH¢5.88 billion but only secured approximately GH¢4.4 billion, missing its target by 25.3%. This outcome occurred despite the government offering higher interest rates on two of the three treasury bills.
The interest rate on the 91-day bill rose to 25.01%, up from 24.91%, marking a 10-basis point increase. The 182-day bill saw a slight uptick to 26.81% from 26.80%, while the one-year note remained unchanged at 28.07%. Although the government successfully met its borrowing target for the first time in ten weeks during the previous auction (September 13, 2024)—largely driven by a high response to an increase in the rate for the 91-day bill—the strategy failed this time leading to the drop in amount realised.
Despite the overall low total subscription, the 91-day bill remained the most popular, accounting for nearly 86% of the total borrowed amount. Conversely, the one-year note, which did not see an interest rate increase, attracted less than 4% of total subscriptions.
The government’s borrowing has surged since August, deviating sharply from the levels seen in the first half of the year. As the government raises interest rates on treasury bills to entice investors, this could constrain the Bank of Ghana’s Monetary Policy Committee’s ability to lower the policy rate in its upcoming meeting. Many anticipate a reduction in line with global trends, as major economies, including South Africa and the United States, recently lowered their rates for the first time in four years.
However, a potential decrease in Ghana’s policy rate, maintained at 29% since January, amidst rising treasury bill rates could create mixed signals in the market, a scenario the Central Bank would likely prefer to avoid.
