For many weeks now, Ghana’s Treasury bill (T-Bill) market has been showing signs of exceptionally deep liquidity, with investors offering nearly three times the amount the government sought last week even as yields fell sharply across all three major tenors.
According to the latest auction report, the government entered the auction seeking GH¢5.428 billion, but investors submitted a staggering GH¢14.270 billion in bids.
This created an oversubscription of GH¢8.842 billion, or a whopping 162.9%. Yet the Treasury accepted only GH¢5.855 billion, leaving GH¢8.415 billion, representing 58.97% of all bids rejected.
The significant part is that this flood of investor money came despite a significant decline in Treasury bill yields.
The 91-day rate fell from 5.4682% to 5.0795%, while the 182-day yield declined from 7.2720% to 7.0800%. At the long end, the 364-day rate recorded an even sharper drop, falling from 12.5000% to 11.5930%.
Demand was particularly concentrated in the one-year instrument. The 91-day bill attracted GH¢3.1 billion, while the 182-day bill received GH¢1.2 billion. The 364-day bill, however, drew a whopping GH¢9.9 billion, accounting for roughly 69% of total investor bids.
The combination of falling yields and rising demand is significant. Investors are effectively putting more money into government securities while accepting lower returns, suggesting strong appetite for the relative safety and predictability of Treasury bills and substantial liquidity looking for a home within Ghana’s financial system.
For the government, the development offers considerable financing flexibility. The Treasury was able to raise GH¢426.84 million above its target without needing to accept anywhere near the full amount investors offered. This gives the government greater bargaining power to be selective about the cost of borrowing while still securing the funds needed for its fiscal operations and short-term cash-flow requirements.
On the side of investors, however, the falling yields mean the competition for government paper is becoming more intense. The extraordinary demand for the 364-day bill, even as its yield fell by nearly one percentage point, suggests investors may be prioritising security and liquidity over maximum returns.
The latest auction reinforces a trend emerging in Ghana’s T-bill market that there is clearly no shortage of lenders. The bigger question is how much the Treasury wants to take and at what price.
