Investor appetite for treasury bills has significantly weakened in Ghana. The recent auction revealed that the 364-day bill attracted only half of the bids submitted. This marks a troubling trend for the government as it struggles to meet its financing targets through domestic borrowing.
Prior to this development, expectations were more optimistic. Investors anticipated stable interest rates and favorable liquidity conditions. However, the current climate has shifted dramatically.
The government’s latest treasury bills auction recorded its seventh consecutive undersubscription. Investors submitted total bids of GH¢4.48855 billion across the 91-day, 182-day, and 364-day instruments. The government’s target was GH¢4.475 billion but was missed by approximately GH¢577 million.
In detail, the 91-day bill attracted GH¢2.75623 billion in bids, with GH¢2.71025 billion accepted. The 182-day bill had GH¢717.64 million tendered and GH¢664.37 million accepted. Yet, of the GH¢960.08 million in bids for the 364-day bill, only GH¢522.48 million was accepted.
The weighted average discount rate for the 364-day bill was set at 9.1932 percent, equating to an interest rate of 10.1239 percent. These rates reflect a cautious investor sentiment amid rising interest rates.
The undersubscription extends a worrying trend that has seen the government struggle to meet its financing targets through domestic borrowing. Experts suggest that current liquidity conditions may be impacting investor confidence.
The government has set a higher target of GH¢5.009 billion for the next auction, but success will depend heavily on market conditions and investor sentiment moving forward.
