A senior research analyst in financial securities, Mac-Jordan Nartey, has dismissed claims that the recent undersubscription of government treasury bills signals a loss of investor confidence.
The senior research analyst with Laurus Africa Securities describes the recent market reaction to the government’s short-term bill as a display of investor rationality rather than panic.
His comments come after the government missed its treasury bill target by over 30%, raising concerns that investors might be losing trust in short-term government instruments following months of oversubscriptions.
Speaking in an interview monitored by The High Street Journal, Mac-Jordan Nartey explained that investors are not shunning government securities out of fear or uncertainty, but are simply being strategic in chasing higher yields. This, he says, is a normal and rational response to changing market dynamics.
Explaining what caused the recent undersubscription, He pointed out that the Bank of Ghana recently absorbed liquidity worth about GH¢9.5 billion at an interest rate of around 21%, while the 91-day treasury bill yield stood at just about 10.47%.
For investors, this gap presents a clear incentive to seek alternatives offering better risk-adjusted returns rather than settling for significantly lower yields.
“It will be quick to say that investors are losing confidence in the securities of Ghana. I think their confidence is still there. What we are seeing is a large play of investors’ need for higher returns. I mean, as a rational investor, if you have two options, you will most likely always opt for what really balances your risks and still gives you the optimum and the highest return,” he noted.
He added, “What we are seeing is because last week you saw the BoG soaking up liquidity amounting to about GHC 9.5 billion, and this was around 21%. While you see a 91-day yield of just around 10.47%, which is considerably below that. So we are just seeing a rational play of investor behaviour on the market and not necessarily investor confidence dampening in the government securities.”
This insight from the analyst indicates that monetary policy tightening and liquidity management operations by the Bank of Ghana have a significant influence on the patronage of the government’s short-term bills.
This is also a signal for policymakers to reassess the alignment between T-bill rates and market realities, ensuring they remain competitive enough to attract investors without undermining fiscal stability.
For now, it is clear, at least in the books of the analyst, that the undersubscription is just a matter of investors being rational and not a loss of confidence in the bills.
