T-Bills Hit Fourth Week of Undersubscription as Gov’t Records 26% Shortfall Despite Low Target

The treasury bills market (T-Bills) has another undersubscription in the latest auction, marking a fourth consecutive week that some investors have shied away from the government‘s bills.

The fourth streak of undersubscription deepens the concerns about the investor perception of the government’s securities.

According to the Bank of Ghana, the latest auction report concluded on Friday reveals that despite a relatively lower target when compared to two weeks ago, bids tendered by investors failed to meet the target.

From a relatively high target of GH₵ 7.6 billion two weeks ago, the government intended to borrow just GH₵ 4.6 billion. At the end of the auction, total bids submitted by investors amounted to GH₵ 3.4 billion leading to a shortfall of GH₵ 1.2 billion. This represents an undersubscription of 26%.

The majority of bids came from the 91-Day bill with bids amounting to GH₵ 2.4 billion. The 182 -Day bill also contributd GH₵ 716 million while the 364-Day bill also amounted to GH₵ 236.09 million.

Despite failing to meet its target, some bids submitted by investors were rejected. Out of the total bids of GH₵ 3.4 billion, the government only accepted GH₵ 2.9 billion, rejecting a total of GH₵  417.7 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 14.7023% to 14.6976%. The 182-day bill also declined from 15.2543% to 15.2540%. while the rate on the 364-day also fell to 15.6936% from 15.7418%.

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¢ 3.9 billion in its upcoming auction this week. 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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