Ghana Treasury Bill Auction Marginally Oversubscribed Amid Rising Rates
The government of Ghana has achieved a slight oversubscription in its latest treasury bill auction, raising GH¢5.825 billion against a target of GH¢5.623 billion, data from the Bank of Ghana shows.
While the oversubscription reflects continued investor interest in government securities, it comes at a higher cost. Interest rates on the bills increased, intensifying concerns over the escalating cost of borrowing and its potential implications for fiscal sustainability.
The auction results revealed that all submitted bids were accepted, with the 91-day bill dominating the sale. A substantial GH¢5.107 billion, equivalent to 87.67% of the total amount raised, came from the 91-day bill.
Meanwhile, the 182-day bill attracted GH¢560.07 million, while a little over GH¢157 million was offered for the 364-day bill.
Despite the oversubscription, the cost of borrowing continued to climb, with yields rising across all maturities. The 91-day bill saw its yield increase by 26 basis points to 26.82%, up from the previous week.
Similarly, the 182-day bill recorded a rate of 27.67%, slightly higher than the 27.58% seen a week earlier. The yield on the 364-day bill also climbed to 29.12%, compared to 28.97% the preceding week.
It is believed that the government may have struggled to meet its target if interest rates had remained flat or declined. The rising rates highlight the government’s need to offer higher yields to attract investors amid tightening liquidity in the market.
The latest auction reflects the government’s ongoing efforts to secure financing through short-term debt instruments, even as it grapples with rising borrowing costs.
While the oversubscription indicates strong investor interest, the uptick in yields underscores the delicate balance between meeting fiscal needs and managing the cost of debt.
As the government continues to rely heavily on treasury bills for financing, there are growing concerns about the potential impact of rising interest rates on public finances. The increasing cost of servicing short-term debt could further strain the country’s fiscal space, especially in an environment of tight liquidity and economic uncertainties.
