Just a week after the Treasury Bills (T-Bills) market staged a strong comeback with a GHC1.24 billion oversubscription, investor confidence appears to have faltered again.
The latest auction results from the market reveal a sharp undersubscription of GHC3.65 billion, despite higher interest rates offered across all maturities.
According to the latest auction results published by the Bank of Ghana (BoG), the government sought to raise GHC6.58 billion, but investors submitted only GHC2.93 billion in bids, of which GHC2.89 billion was accepted.
This means the auction fell short of its target by more than 55%, signaling a significant drop in investor appetite for short-term government securities.
As has been the trend, the shortest-term security, the 91-day, continued to remain investors’ favorite with total bids amounting to GHC2.08 billion. The 182-day gathered GHC704.66 million, and the 364-day also amounted to GHC136.53 million
The slump comes even as yields or interest on all maturities ticked upward in an apparent bid to attract investors. The 91-day bill rate rose from 10.5301% to 10.6976%, the 182-day bill inched up from 12.3069% to 12.4385%, and the 364-day bill moved slightly higher from 12.8672% to 12.9224%.
However, despite the improved rates, the response from investors was not favourable to the government’s target.
The sharp reversal could possibly be a result of weak liquidity in the market and possible portfolio shifts by investors toward other instruments or sectors. Just last week, the market had been buoyed by what appeared to be a revival in investor confidence when bids exceeded targets by over a billion cedis.
This week’s outcome, however, paints a different picture of caution and hesitation. The sharp contrast between the GHC1.24 billion oversubscription and the GHC3.65 billion undersubscription in back-to-back auctions underscores how fragile sentiment remains in the domestic debt market.
Meanwhile, the government plans to raise a more ambitious target of GH¢6.8 billion in its upcoming auction this week. Will there be a rebound, or will the nosedive continue?
Market watchers are closely monitoring the market to see if the shortfall could be reversed.
