There is a sustained investor rebound on the Treasury bill (T-Bills) market as the instruments have been oversubscribed for the third consecutive time.
After recording oversubscriptions in the last two weeks, the bills have once again recorded a little over 75% oversubscription.
The latest auction report published by the Bank of Ghana reveals that the government planned to borrow a total amount of GH¢ 3.9 billion. At the end of the auction last Friday, total bids submitted by investors amounted to GH¢ 6.8 billion.
This represents an oversubscription of 75.8%.
Majority of the bids came from the 91-day bill, with bids amounting to a total of GH¢4.7 billion. The 182-day bill also accrued a total of GH¢1.2 billion while the 364-day bill also brought in GH¢ 774 million.
Although the government intended to borrow just GH¢ 3.9 billion, the significant oversubscription leading to a drop interest propelled it to borrow beyond the target.
Instead of the planned target, the government added GH¢1.6 billion , walking away with a total of GH¢5.5 billion.
The interest rate of the 91-Day Bill declined significantly from 10.8387%, to 10.2949%, while that of the 182-Day Bill also recorded a drop from 13.2279% to 12.3594%. The 364-Day bill also saw a decline from 14.3050% to 13.2465%.
The consistent drop in the interest on bids, especially the 91-day bill has resulted in the reduction of the Ghana Reference Rate leading to cheaper cost of credit for borrowers.
Moreover, the fall in the interest means the government is borrowing at a cheaper cost hence reducing its rate of debt accumulation.
In the meantime, the government plans to raise a relatively ambitious amount of GH¢8.6 billion in its upcoming auction this week. Will the high demand push the interest rates up?
Market watchers are closely monitoring the market to see if rebounding investor confidence will continue or it’s just a “nine-day wonder.”
