The government could not sustain the relative boom recorded in the on T-bills market two weeks ago as the latest auction has recorded a significant nosedive, questioning the stability of investor confidence.
The government, last two weeks, saw a significant oversubscription of GH¢1.12 billion in T-bills, representing over 18% of the target.
Unfortunately, the gains could not be maintained in the subsequent auction as the government failed to meet its target.
The latest auction results published by the Bank of Ghana reveal that the government planned to borrow a total of GH¢ 6.3 billion. At the end of the auction, total bids submitted by investors amounted to GH¢ 5.3 billion, leading to a shortfall of GH¢ 1.03 billion. The undersubscription is about 16.3% of the target.
In line with the government’s commitment to ensure fiscal prudence, despite failing to meet its target, only GH¢4.7 billion of the bids submitted were accepted. This means the state rejected a total of GH¢563.37 million.
The downward trend of the interest rate on the bids significantly continued last week.
From the auction report, the yield on the 91-day bill declined from 15.3209% to 15.2333%. The 182-day bill also declined from 16.0380% to 15.7783% while the rate on the 364-day also fell to 16.959% from 18.6206%.
In the meantime, the government plans to raise a moderate GH¢5.4 billion in its upcoming treasury bill auction. Market watchers are closely monitoring the situation to see if there will be a rebound or the nosedive recorded last week will be replicated in this week’s auction.
