The government’s borrowing target from the short-term market (T-Bills) last week hit another snag, marking the fourth consecutive week the government has missed its target.
As has been the trend in the past weeks, investors are not positively responding to the government bills as last week’s auction resulted in an undersubscription of a whopping 47.9%.
The bills, a month ago, fell short by GH¢1.7 billion and by GH¢1.2 billion three weeks ago. It failed to meet the target by GH¢608 million two weeks ago, continuing to an undersubscription of GH¢3.2 billion.
The latest auction report published by the Central Bank reveals that the government targeted to borrow a total of GH¢6.7 billion last week. At the end of the auction, total bids submitted by investors amounted to just GH¢3.5 billion. This resulted in an undersubscription of GH¢3.2 billion, representing a shortfall of 47.9%.
From the auction report, the 91-day bill gathered a total of GH¢2.0 billion, while the 182-day bill also accumulated GH¢1.1 billion. The 364-day bill accumulated GH¢321 million.
Irrespective of the shortfall, the government did not accept all bills tendered by investors. Out of the total of the GH¢3.5 billion submitted, the government rejected GH¢166 million, accepting a total of GH¢3.3 billion.
The interest rate on the bills, amid the shortfall, also took a nosedive, declining marginally. This is in contrast with the developments last two weeks, where the rate was raised.
The interest rate of the 91-Day Bill decreased from 10.4197% to 10.3265%, while that of the 182-Day Bill also decreased from 12.3861% to 12.3724. The 364-Day bill also saw a decline from 13.0043% to 12.9985%.
In the meantime, the government plans to raise a relatively less ambitious amount of GH¢3.8 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.
