T-Bills Enter Third Week of Undersubscription as Gov’t Misses Target by GH₵ 362M in Latest Auction

The treasury bills market (T-Bills) has recorded the third consecutive undersubscription in the latest auction by the Bank of Ghana.

The third streak of shortfall in the T-bills raises concerns about investor confidence in the government‘s short-term instrument.

The latest auction report for last week, published by the Bank of Ghana, reveals another shortfall, although marginal, amounting to a little over GH₵ 362 million.

According to the report, the government targeted to borrow a total of GH₵ 7.6 billion. At the end of the auction, total bids submitted by investors amounted to GH₵ 7.2 billion. This resulted in a shortfall of GH₵ 362 million, representing just 4.8% of the target.

Following the normal trend, the majority of the bids came from the 91-day bill, with bids amounting to GH₵ 6 billion, followed by the 182-day bill, accruing GH₵ 995.27 million. The 364-day bill mobilized the least with bids amounting to just GH₵ 204.50 million.

With the exception of the 364-day bill, all bids submitted by the two bills were accepted in full. However, out of the GH₵ 204.50 million submitted for the 364-day, the government accepted GH₵ 173.40 million, rejecting just GH₵ 31 million.

On the interest rate front, the downward trajectory on the yield curve continued as the rates on all bids fell.

From the auction report, the yield on the 91-day bill marginally declined from 14.7922% to 14.7023%. The 182-day bill also declined from 15.4590% to 15.2543%, while the rate on the 364-day also fell to 15.7418% from 15.7991%.

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 rate on the bills.

In the meantime, the government plans to raise GH¢ 4.5 billion in its upcoming auction. Market watchers are closely monitoring the market to see if there will be a turnaround or if the undersubscription streak will persist.

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