The Treasury bills (T-Bills) market has seen a remarkable turnaround after three successive weeks of undersubscriptions, which marked weeks of uncertain investor confidence in the government bills.
The government has been significantly missing its T-Bills target as it was feared that investors were probably looking for alternative investments due to the significant drop in the interest rate on the bills.
But in a quick turn of events, the government has recorded a massive comeback as the recent auction report reveals the target was exceeded by close to GH¢1 billion.
The latest auction report published by the Bank of Ghana reveals that the government last week planned to borrow a total of GH¢5.5 billion. At the end of the auction, total bids tendered amounted to GH¢ 6.5 billion, exceeding the target by GH¢ 989.91 million.
This represents an oversubscription of 18.18% of the target.
However, despite the oversubscription of GH¢989.91 million, the government only accepted an additional GH¢424.77 million to its target, walking away with a total of GH¢5.97 billion. This means that the government rejected GH¢ 566.14 million of the excess bids.
The downward trajectory of the yield curve continued as the interest rates on all bids fell.
From the auction report, the yield on the 91-day bill declined from 15.1087% to 14.9287%. The 182-day bill also declined from 15.6810% to 15.5515%, while the rate on the 364-day also fell to 16.0012% from 16.7872%.
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.
It is quite unclear if the rebound will continue this week or it will just be a nine-day wonder.
In the meantime, the government plans to raise GH¢3.9 billion in its upcoming auction. Market watchers are closely monitoring the market to see if the rebound will be sustained or if the back-to-back undersubscription recorded in the previous three weeks will be replicated.
