Investor appetite for treasury bills has significantly weakened in Ghana. The latest auction revealed troubling trends in the demand for government securities. The 364-day bill attracted only half of the bids submitted. This marks a decisive moment for the government’s borrowing strategy.
Before this development, expectations were more optimistic. Investors had shown interest in various treasury bills, anticipating stable returns amid favorable liquidity conditions. However, the recent 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, which it missed by approximately GH¢577 million.
The breakdown of bids highlights the shift in investor sentiment. The 91-day bill attracted GH¢2.75623 billion in bids, with GH¢2.71025 billion accepted—indicating stronger interest in shorter-term securities. In contrast, the 182-day bill had GH¢717.64 million tendered and GH¢664.37 million accepted, showing moderate demand.
Yet, the 364-day bill faced significant challenges. Of the GH¢960.08 million in bids for this long-term instrument, only GH¢522.48 million was accepted. This undersubscription reflects growing caution among investors regarding interest rates and economic conditions.
The weighted average discount rate for the 364-day bill was 9.1932 percent, equating to an interest rate of 10.1239 percent. These figures suggest that while yields remain attractive on paper, investor confidence is faltering.
The government has set a higher target of GH¢5.009 billion for the next auction, but achieving this will be difficult without improved liquidity conditions in the banking system and restored investor confidence.
This undersubscription extends a worrying trend that has seen the government struggle to meet its financing targets through domestic borrowing. Experts warn that unless there is a turnaround in market sentiment or economic stability improves, future auctions may face similar challenges.
As Ghana navigates these financial waters, officials must address underlying concerns about economic growth and fiscal policy to regain investor trust.
