In an interesting twist, the last oversubscription recorded in T-bill sales could not be sustained as the government has missed its target in the latest auction.
The bills saw a moderate turnaround in the last two weeks’ auction, recording an overflow of 16% after four consecutive weeks of undersubscription.
Last week’s auction shows that the oversubscription in the week prior was just a one-off event, as the undersubscriptions have returned, as the bills saw a 21% shortfall last Friday.
The latest auction report published by the Bank of Ghana indicates that the government planned to borrow an amount of GH¢8.3 billion. At the end of the auction, total bids brought in by investors totaled GH¢6.5 billion. This marks a shortfall of GH¢1.8 billion, representing an undersubscription of about 21%,
The auction report further reveals that the 91-day bill accumulated a total GH¢5.5 billion, while the 182-day bill also accumulated GH¢789 million. The 364-day bill also gathered just GH¢215 million of the total bids.
An analysis of the report reveals that out of the total GH¢6.5 billion submitted, the government only accepted GH¢6.2 billion, rejecting the remaining amounting to GH¢255 million.
This means that despite the government failing to meet its target of GH¢8.3 billion, it walked away with just GH¢6.2 billion.
This undersubscription came amid an increase in the interest rate of two of the instruments.
The interest rate of the 91-Day Bill increased from 10.4220% to 10.5304%, while that of the 182-Day Bill also increased from 12.4110% to 12.4412%. However, the 364-Day bill also saw a decrease from 12.9725% to 12.9574%.
In the meantime, the government plans to raise a relatively less ambitious amount of GH¢3.0 billion in its upcoming auction this week. Will the dropping demand last week continue this week, or will there be a reversal?
Market watchers are closely monitoring the market to see if there will be a rebound.
