Ghana’s short-term government securities market showed significant recovery last week as the Treasury recorded its first oversubscription in two months, driven by a surge in investor demand for T-bills.
Investor Confidence Rebounds
The latest Bank of Ghana data reveals that the Treasury raised GHS 10.64 billion from the auction, comfortably surpassing its GHS 5.44 billion target and the upcoming maturity of GHS 5.24 billion. Total bids submitted reached GHS 20.98 billion, indicating an impressive oversubscription rate of 97.82%.
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This resurgence is being interpreted by market watchers as a signal of renewed investor confidence in Ghana’s short-term securities, following weeks of lacklustre activity in the T-bill market.
Breakdown of Bids and Acceptances
Demand was strongest for the 91-day bills, where investors tendered GHS 13.77 billion. Of this, the Treasury accepted GHS 5.65 billion.
For the 182-day bill, GHS 4.22 billion in bids were received, with GHS 2.99 billion accepted.
In the 364-day category, GHS 2.98 billion was bid, and GHS 2.00 billion was accepted.
Impact of BoG’s Rate Cuts
Analysts attribute the robust demand to the Bank of Ghana’s recent sharp reductions in its policy instruments, specifically the BoG Bills, whose yields previously stood at 27%. The lower yields on these instruments have driven investors to seek better returns in government T-bills.
Falling Yields on T-bills
The surge in demand corresponded with falling yields across the board:
- The 91-day bill yield dropped by 93 basis points to 13.72%.
- The 182-day bill yield decreased by 41 basis points to 14.61%.
- The 364-day bill yield declined by 68 basis points to 14.73%.
Outlook
Following this encouraging outcome, the government has set a target to raise GHS 7.70 billion in its next T-bill auction.
