It is emerging that the surge in demand for government Treasury bills in recent weeks is being driven by maturing money market instruments, combined with a calmer and more supportive macroeconomic environment.
These two factors, including the rising fiscal payments on the side of the governments, are shaping the short-term market in recent weeks by reshaping investor behaviour.
This is an analysis by a financial analyst and Senior Research analyst at Laurus Africa, Mac-Jordan Nartey. The market, last week, recorded an oversubscription of 20% despite an ambitious target of over GHC7 billion. After the auction, the government ended up accepting about 20% more than it originally planned, translating into roughly GH¢9 billion in uptake.
The strong showing was not accidental, according to a Senior Research Analyst at Laurus Africa, but the result of several forces converging at the same time. It is also important to note that this recent oversubscription marks the seventh in a row.
Analysing the drivers of this surge, Mac-Jordan noted that at the heart of the surge is liquidity. As large volumes of Bank of Ghana Open Market Operation (OMO) bills mature, cash is flowing back into the hands of banks, fund managers, and institutional investors. That money must be reinvested.
With limited alternatives that offer both safety and ease of exit, Treasury bills have naturally become the preferred parking spot.
This rotation is already visible. While OMO instruments had dominated investor preference in previous months, recent auctions show a gradual but clear shift toward the Treasury bill segment. Even last week, the OMO market itself recorded strong absorption, suggesting investors are actively reshuffling portfolios rather than pulling back from government paper altogether.
Beyond these technical flows, the broader economic backdrop is also helping.
Macro indicators are turning more supportive, boosting confidence that short-term government securities remain a safe bet. Inflation pressures have eased compared to earlier periods, the cedi has shown greater stability, and fiscal signals have become more predictable. This reduces uncertainty and makes locking money into short-dated instruments less stressful.
“I think the drivers are multiple from a technical and also from a fundamental perspective. I think technically, we are seeing more supportive macro indicators,” he explained.
He further explained that on the fiscal side, government activity is also feeding liquidity into the system. Significant fiscal payments are being made, while additional money market securities are maturing around the same time. The combined effect is more cash chasing a relatively narrow set of low-risk instruments.
The result is what played out at last week’s auction, where there was heavy bidding, strong oversubscription, and the government comfortably exceeded its target, even after setting a relatively high amount to raise.
This strong demand is welcome from the side of the government. It means borrowing needs can be met more easily and potentially at better rates. For investors, it reflects a cautious but confident stance, prioritising safety, liquidity, and predictable returns in a market that is slowly regaining balance.
“More fundamentally, we are beginning to see the government make significant fiscal payments as well. And also, in the coming weeks or within this period, we’ve seen significant maturities in terms of money market security,” he added.
