The government’s T-Bills performance has taken a nosedive again after a rebound last two weeks, inspired hope of rising investor confidence.
Until the T-Bills auction of last two weeks, the government endured three consecutive weeks of undersubscription, missing its targets significantly.
The over GH¢1 billion oversubscription recorded two weeks ending the three weeks of undersubscription was expected to continue.
Unfortunately, the latest auction result last week has revealed that the momentum could not be maintained as the performance has reverted to an undersubscription despite the moderate target.
Last week’s auction report published by the Bank of Ghana reveals that the government targeted to borrow a total of GH¢ 3.9 billion. At the end of the auction, total bids submitted by investors amounted to GH¢ 3.5 billion, leading to a shortfall of GH¢ 352.47 million.
The undersubscription, although marginal, represents 9% of the target.
Interestingly, for the first time in many weeks, all bids tendered by investors were accepted with no rejection.
On the interest rate front, the downward trajectory on the yield curve continued as the rates on all bids fell.
From the auction report, the yield on the 91-day bill declined from 14.9287% to 14.7949%. The 182-day bill also declined from 15.5515% to 15.4855%, while the rate on the 364-day also fell to 15.9128% from 16.0012%.
The development on the T-bills market is in line with the government’s agenda to ensure fiscal discipline by bringing borrowing under control and also reducing the cost of borrowing through the reduction in the interest rates on the bills.
In the meantime, the government plans to raise GH¢6.7 billion in its upcoming auction. Market watchers are closely monitoring the market to see if there will be a turnaround or if the undersubscription streak will persist
