The treasury bills market (T-Bills) has recorded a second consecutive undersubscription after a rebound three weeks ago.
The rebound recorded three weeks ago could not be sustained as the two subsequent weeks have seen the demand for T-Bills take a nosedive, suggesting an investor lay back.
The latest auction report for last week, published by the Bank of Ghana, reveals that the government bills were undersubscribed by a total of GH¢ 1.2 billion.
The government targeted to borrow a total of GH¢ 6.7 billion. At the end of the auction, total bids submitted by investors amounted to GH¢ 5.5 billion, resulting in a shortfall of GH¢ 1.2 billion, representing a 17.9% undersubscription of the target.
The majority of the bids came from the 91-day bill, with bids totalling GH¢ 3.5 billion, followed by the 182-day accruing GH¢ 1.8 billion. As usual, the 364-day instrument mobilized the least, with total bids amounting to just GH¢ 157.18 million.
Despite failing to meet its target, the government rejected a significant part of the bids submitted.
Out of the GH¢5.5 billion bids, the government only walked away with GH¢4.4 billion, rejecting a total of GH¢1.1 billion.
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 marginally declined from 14.7949% to 14.7922%. The 182-day bill also declined from 15.4855% to 15.4590% while the rate on the 364-day also fell to 15.7991% from 15.9128%.
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 rate on the bills.
In the meantime, the government plans to raise GH¢7.6 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
