In a surprising turn of events, last week’s Treasury bill auction ended with an undersubscription, as total demand fell 22.12% short of the government’s target.
This result marks a break from the previous trend of three consecutive oversubscriptions and comes on the heels of a notable decline in the interest rate provided on the 56-day Bank of Ghana (BoG) bill.
According to the latest data from the BoG, the government had aimed to raise GHS 8.58 billion but managed to secure only GHS 6.69 billion. The bidding revealed a strong interest in the shorter-term securities, with GHS 5.02 billion in bids submitted for the 91-day bill; of this amount, GHS 4.99 billion was ultimately accepted. For the 182-day bill, GHS 1.23 billion was taken from GHS 1.37 billion in bids, while the 364-day bill accepted bids totaling GHS 452 million out of GHS 490 million bid.
Analysts attributed the undersubscription to the government’s ongoing practice of rejecting high-yield bids, as well as a noticeable influx of liquidity into the BoG’s auctions on Mondays and Wednesdays, which raised about GHS 6.2 billion prior to the Friday sale. This increased liquidity may have lessened the competition seen in previous auctions.
Meanwhile, yields on short-term securities continue to trend downwards, hovering between 10% and 13%. Specifically, the yield on the 91-day bill fell by 9 basis points to 10.20%, while the 182-day bill yield dropped by 10 basis points to 12.25%, and the 364-day yield decreased by 14 basis points to 13.10%.
Looking ahead, the government has set its sights on raising GHS 4.24 billion at the next auction, as it navigates this changing landscape in the Treasury bill market.
Source: Apexnewsgh.com
