Ghana’s Treasury bill market may be showing its first signs of cooling after the government missed its borrowing target by GH¢764.27 million last week.
It must be emphasized that this shortfall came despite receiving enough investor bids to technically oversubscribe the auction. However, the oversubscription was in pittance relative to the performances of the previous weeks.
The Treasury sought GH¢7.97 billion, but investors submitted GH¢8.20 billion, representing a modest 2.8% oversubscription. Yet the government accepted only GH¢7.21 billion, leaving a 9.6% shortfall against its target and rejecting GH¢990 million of bids.
The scale of the oversubscription is what makes the auction particularly interesting. After weeks in which investor demand repeatedly ran billions of cedis above government targets, with some auctions recording oversubscriptions of more than 80% and even above 160%, last week’s GH¢225.73 million excess demand looks remarkably thin.
It raises an important question about whether the extraordinary liquidity that has flooded Ghana’s Treasury bill market is beginning to dry up, or is this simply a temporary moderation in investor demand?
The question becomes even more striking because borrowing became cheaper across every tenor.
The 91-day bill attracted GH¢4.6 billion, while its interest rate fell from 4.8050% to 4.6949%. The 182-day bill drew GH¢2.1 billion, with its rate declining from 6.6831% to 6.5107%. At the longer end, the 364-day bill attracted GH¢1.6 billion, even as its rate marginally slipped from 10.1169% to 10.1017%.
For government, the combination presents a mixed picture. Falling rates should make domestic borrowing cheaper, but the inability, or decision, not to raise the full target means the Treasury cannot automatically assume that lower yields will translate into unlimited demand.
For investors, the auction signals a changing bargain. Returns are falling, and if liquidity is indeed moderating, investors may increasingly become more selective about locking their money into government securities at lower rates.
The latest auction therefore deserves attention not because demand disappeared, since it did not, but because the huge wall of liquidity seen in previous weeks suddenly looks much thinner.
Whether this is a blip or the beginning of a broader shift could determine how comfortably government finances its short-term needs in the weeks ahead.
