A hike in the interest rate on the Treasury Bills (T-Bills) last week was unable to drive investor interest as the bills missed their target for the third consecutive week.
Despite a relatively less ambitious target, the market did not respond positively in demand for the government bills as the target for last week fell short by a little over GH¢608million.
The bills, in the last three weeks, fell short by GH¢1.7 billion and by GH¢1.2 billion in the last weeks before the GH¢608 million last week.
The latest auction report published by the Bank of Ghana reveals that the government targeted to borrow a total of GH¢6.4 billion last week. At the end of the auction, total bids submitted by investors amounted to GH¢5.8 billion. This resulted in an undersubscription of GH¢608.87 million, representing a 9.5% shortfall of the target.
From the report, the 91-day bill garnered a total GH¢4.05 billion, while the 182-day bill also accumulated GH¢1.34 billion. The 364-day bill accumulated GH¢430 million of the total bids.
Despite the shortfall, not all bids submitted were accepted by the government. Out of the total of GH¢5.8 billion submitted, GH¢5.7 billion was accepted, resulting in the government rejecting a paltry GH¢62 million.
On the interest rate front, there was a bit of a turnaround. To be able to attract more investors, the government hiked the rate on some of the bills.
The interest rate of the 91-Day Bill increased from 10.1374% to 10.4197, while that of the 182-Day Bill also increased from 12.2302% to 12.3861%
It was on the 364-Day bill that saw a decline from 13.0865%. 13.0043%.
The hike in the rate means that the target of the government to drag down the rate on the bills to a single digit has suffered a little setback. Outcomes of the auctions in the coming weeks will be very crucial in determining the fate of that agenda.
In the meantime, the government plans to raise a relatively ambitious amount of GH¢6.7 billion in its upcoming auction this week. Will the slow demand last week continue this week, or will there be a rebound?
Market watchers are closely monitoring the market to see if there will be a rebound or if the moderate investor flight will continue.
