The Government of Ghana has recorded its 13th consecutive Treasury bill oversubscription, reinforcing a strong wave of investor demand for the government’s bill.
This 13th oversubscription in a row was recorded even as interest rates declined significantly across all tenors.
At the latest auction result published by the Bank of Ghana, the government targeted GH¢9.332 billion but received bids totaling GH¢25.2009 billion, representing an oversubscription of GH¢15.8689 billion, or 170% above the target.
The government accepted GH¢11.4100 billion, exceeding its target by GH¢2.0780 billion, while rejecting GH¢13.7910 billion in bids.
This auction result reinforces analysts’ interpretation that liquidity in the market remains strong and abundant.
Strong Demand Across All Tenors
The result reveals that investor appetite was broad-based across all tenors. For instance, the 91-day bill accumulated a total of GH¢8.6 billion in bids.
The 182-day bill also accumulated a total of GH¢7.1 billion in bids, while that of the 364-day remained stronger, accumulating a total of GH¢9.4 billion in bids
The distribution of demand across short-, medium-, and longer-term instruments suggests confidence is not limited to temporary cash parking. Investors are positioning across maturities, signalling sustained comfort with short-term government securities.
What 13 Straight Oversubscriptions Mean
The thirteen consecutive oversubscriptions signal that there is significant liquidity in Ghana’s financial system.
This means that banks and institutional investors have funds available and are choosing government securities as a preferred investment channel. In an environment where private sector lending still carries elevated risk, Treasury bills offer relative certainty.
To put it simply, there is more money chasing government paper than the government needs. This gives the government leverage.
The Big Shift: Interest Rates Are Falling Fast
Despite the strong demand, yields dropped sharply across all tenors:
91-day bill: declined from 8.6095% to 6.4530%
182-day bill: dropped from 10.6788% to 8.1822%
364-day bill: declined from 11.0620% to 10.2069%
This follows simply economic theory that when demand consistently outpaces supply, prices drop. The government can afford to borrow at lower rates due to the high demand. Investors competing to lend effectively push yields downward.
What This Means for Fiscal Operations
The lower yields translate directly into lower short-term borrowing costs. This means reduced interest payments on new domestic debt and improved cash flow management.
It also implies a greater room to manage budget execution and reduced refinancing pressure in the immediate term
By accepting GH¢2.0780 billion above its original target, the government also boosts liquidity buffers to meet upcoming maturities or finance priority expenditures.
However, there is a cautionary note. While declining yields reduce borrowing costs, accepting more than the target still increases the stock of short-term debt. Over time, repeated rollovers, even at lower rates, can add to total debt accumulation if not carefully managed.
Meanwhile, the government plans to raise a target of GH¢5.8 billion in its upcoming auction this week.
