T-bills auction: Government records 80% oversubscription for first time in 2 months; interest rates mixed

Ghana’s treasury bill auction recorded its first oversubscription in two months following Fitch Ratings decision to upgrade the country’s sovereign credit rating to B- with a stable outlook.

The improved investor response is being viewed by analysts as a sign of growing confidence in Ghana’s economic recovery efforts and improving fiscal outlook.

According to the latest auction results, the government exceeded its treasury bill target after receiving total bids worth GH¢7.82 billion against a target of GH¢4.34 billion. Out of the total bids submitted, the government accepted GH¢6.08 billion.

The strong demand marked a notable turnaround after weeks of weaker investor participation in the short-term debt market.

The majority of investor interest was concentrated in the 91-day treasury bill, which attracted bids amounting to GH¢5.71 billion. The government accepted GH¢4.37 billion from the submissions.

The 182-day bill recorded bids worth GH¢652.22 million, with GH¢571.64 million accepted, while the 364-day bill attracted GH¢1.46 billion in bids, of which GH¢1.14 billion was accepted.

Despite the oversubscription, yields on the short-term instruments showed mixed movements across the yield curve.

The interest rate on the 91-day treasury bill declined by 4 basis points to 4.88%, suggesting stronger investor demand for shorter-term government securities.

Similarly, the yield on the 364-day bill dropped by 6 basis points to 10.13%, reflecting easing borrowing costs for the government on longer-dated short-term instruments.

However, the yield on the 182-day bill increased slightly to 7.03% from 6.97% recorded the previous week, indicating some cautious investor sentiment in the medium-term segment of the market.

Financial analysts say the Fitch upgrade has boosted confidence among investors by signaling improved macroeconomic stability and stronger prospects for Ghana’s ongoing economic recovery programme.

The latest treasury bill auction results are also expected to provide some relief for the government as it continues efforts to manage domestic borrowing costs and strengthen fiscal stability amid ongoing economic reforms.