After recording a marginal oversubscription two weeks ago, the government failed to meet its target last week after the auction.
The bills, after recording a marginal oversubscription of about 14% last two weeks, could not maintain the momentum as the government’s target saw a shortfall of 37%.
The latest auction report published by the Bank of Ghana revealed that the government planned to borrow an amount of GH¢5.6 billion. At the end of the auction, the total bids tendered by investors amounted to GH¢3.5 billion. This marks an excess of GH¢2.1 billion, representing an undersubscription of 37.5%.
The auction report further reveals that the 91-day bill accumulated a total of GH¢2.7 billion, while the 182-day bill accumulated an amount of GH¢705.71 million. Also, the 364-day bill also gathered GH¢119.57 million.
An analysis of the report reveals that out of the total GH¢3.5 billion submitted by investors, the government accepted GH¢3.46 billion. This means that despite failing to meet its target, the government rejected about GH¢23 million of the bids.
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Interestingly, this significant undersubscription was recorded despite a marginal hike in the interest rate on the bills.
The interest rate of the 91-Day Bill increased from 10.4575% to 10.5048%, while that of the 182-Day Bill also increased from 12.3610% to 12.3922%. Moreover, the 364-Day bill also saw an increase from 12.8825% to 128994%.
Meanwhile, the government plans to raise an amount of GH¢3.7 billion in its upcoming auction this week. Will the dip 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.
