Ghana’s Treasury bills have chalked up a sixth consecutive oversubscription, but the latest auction shows the growing trade-off the government is facing.
However, it is emerging that the strong investor demand is now coming at the cost of rising interest rates.
The latest auction report published by the Bank of Ghana (BoG) reveals that the government set a relatively modest target of GH¢3.99 billion, yet investors tendered bids worth GH¢4.78 billion, pushing the auction into a 19.8% oversubscription.
Government eventually accepted GH¢4.21 billion, borrowing about GH¢223 million more than planned, while rejecting roughly GH¢568 million in excess bids.
Analysts believe that the continued oversubscription streak is partly explained by the lower borrowing target, which made the offer more attractive to investors chasing safety and predictable returns.
With limited volumes on offer, demand naturally piled up, especially from banks and institutional investors seeking short-term placements.
The demand was strongest at the short end of the market. The 91-day bill attracted GH¢1.95 billion, while the 182-day paper drew GH¢1.23 billion. The 364-day instrument accounted for GH¢1.61 billion, underlining sustained appetite across the curve.
However, the price of this demand is becoming clearer. Interest rates rose on two of the three tenors, reinforcing concerns that the government is gradually paying more to keep investors interested.
The 91-day rate climbed from 11.0912% to 11.1169%, while the 182-day rate edged up from 12.5249% to 12.5506%. Only the 364-day bill offered mild relief, easing marginally from 12.9407% to 12.932%.
Though the increases appear small, analysts note that persistent upward movement, week after week, can significantly raise debt-servicing costs over time.
On the positive side, repeated oversubscriptions give the government short-term breathing space, ensuring smooth rollover of maturing debt and reducing refinancing risks. It also signals renewed confidence in government paper, especially after months of weak demand earlier in the year.
But there is a downside. Accepting more than planned, combined with rising rates, could gradually inflate interest costs, squeezing fiscal space and putting pressure on spending priorities such as infrastructure, social programmes, and arrears clearance.
The sixth oversubscription confirms that investors are back, but it also highlights the delicate balance facing policymakers: how to maintain strong demand without letting borrowing costs spiral.
Meanwhile, the government plans to raise a very ambitious target of GHC7.6 billion in its upcoming auction this week.
