Ghana’s Treasury bill market has recorded its first undersubscription in several months, providing a fresh sign that liquidity available to the government is tightening after weeks of gradual moderation in investor demand.
At the latest auction, the government sought to raise a minimal GH¢4.121 billion but received total bids of only GH¢3.956 billion, leaving an undersubscription of GH¢164.94 million.
This is equivalent to 4% of the target. The development marks a notable shift in the short-term government securities market. In previous weeks, investors had continued to provide enough funds to meet the Treasury’s borrowing targets, even as the amount of money flowing into T-bills had been gradually declining.
This time, however, available demand fell below the amount the government wanted to borrow. The weakness becomes even more pronounced when the amount actually accepted by the Treasury is considered.
The government accepted GH¢2.212 billion, representing just 53.66% of its GH¢4.121 billion target and leaving a financing shortfall of GH¢1.909 billion, or 46.33%. The Treasury also rejected GH¢1.744 billion of the GH¢3.956 billion in bids submitted by investors, meaning 44.09% of total bids were not converted into government borrowing.
The GH¢164.94 million undersubscription shows that investor demand itself was insufficient to cover the government’s target, while the much larger GH¢1.909 billion gap between the target and actual amount raised also reflects the Treasury’s decision not to accept a significant portion of the bids submitted.
The 91-day bill remained the most heavily subscribed instrument, attracting about GH¢2.3 billion of the total bids submitted at the auction. The 182-day bill received approximately GH¢453 million, while the 364-day bill accumulated about GH¢1.2 billion.
The distribution shows that investors continue to favour shorter-term government securities, but the overall volume of money available for the auction has weakened enough for total bids to fall below the government’s funding requirement. The development is particularly significant because it follows a period in which the Treasury was still meeting its borrowing targets despite signs of declining liquidity.
The decline in demand was accompanied by modest reductions in interest rates across all three maturities.
The marginal rate on the 91-day bill declined from 4.6949% to 4.6941%, while the 182-day bill rate fell from 6.5107% to 6.4895%. The 364-day bill also recorded a decline, moving from 10.1017% to 9.9820%.
The rate movements indicate that the weakening liquidity has not yet translated into higher Treasury bill yields. Instead, rates continued to edge lower, suggesting that the Treasury remained unwilling, or did not need, to significantly raise the price of borrowing to attract additional funds at this auction.
For government, however, the immediate concern is the amount of financing secured. Raising only GH¢2.212 billion against a GH¢4.121 billion target means the Treasury may need to adjust its borrowing plans, rely on other sources of liquidity, or return to the market under different conditions to cover its financing requirements.
For investors, the auction provides a different signal. With fewer funds chasing government securities, investors could potentially gain greater influence over pricing in future auctions if the decline in liquidity persists. But the continued fall in yields means that this shift has not yet translated into higher returns on T-bills.
