Recent Treasury Bill Auction Signals Market Caution – Analyst

The latest Treasury bills auction by the Government of Ghana revealed a marginal undersubscription, with interest rates across the short-term yield curve remaining relatively stable, that’s according to market expert and analyst, Ms. Gifty Annor-Sika Asantewah, President of Women in Forex Ghana.

She further explains that, this trend suggests a cautious stance from investors rather than an outright panic, as concerns over liquidity, inflation, and broader macroeconomic indicators continue to shape market behavior.

According to data released by the Bank of Ghana, the auction held in the third week of April recorded a 2.45% shortfall from the targeted GH¢6.607 billion.

The government managed to raise GH¢6.444 billion in total bids but accepted only GH¢4.630 billion, rejecting a substantial GH¢1.814 billion.

The Analyst interprets this as a strategic move by the government to manage borrowing costs amidst subdued investor enthusiasm, especially in the 182-day and 364-day segments of the market.

Investor

The 91-day bill saw the highest level of investor interest, with GH¢5.058 billion in bids submitted—representing 78.49% of total tenders. However, the government accepted only GH¢3.67 billion from this pool, signaling a preference for pricing discipline and a desire to avoid excessive interest rate obligations.

For the 182-day and 364-day bills, total bids amounted to GH¢905 million and GH¢481.09 million respectively, of which GH¢630.56 million and GH¢324.56 million were accepted. This reflects a relatively weaker investor interest in medium- to longer-tenure securities.

Interest Rates

Despite the undersubscription, yields remained largely flat, which is particularly notable. The interest rate on the benchmark 91-day bill held steady at 15.45%, while the yield on the 182-day bill saw a slight decline to 16.18% from 16.21% the previous month. Similarly, the 364-day bill yield dipped marginally by 3 basis points to settle at 18.62%.

“The consistency in rates implies that the government is not yet under pressure to increase returns to attract demand, a signal of relative macroeconomic stability and continued investor confidence in short-term public debt instruments” she said.

From the market analyst’s perspective, the undersubscription appears to reflect near-term caution rather than a loss of faith in government securities.

“Several factors could be contributing to the current trend. Firstly, the liquidity conditions in the banking sector and among institutional investors may be tightening, resulting in lower capital available for reallocation into government instruments.

“Secondly, investors may be diversifying their portfolios away from short-term bills toward other assets or waiting for signals from upcoming policy decisions, including the next Monetary Policy Committee (MPC) meeting by the Bank of Ghana.”

Policy

Ms Annor-Sika indicated that the yield curve’s relative stability offers an important signal to both policymakers and investors. According to her, it suggests that despite lower demand, inflation expectations remain anchored, and the market does not foresee significant near-term risk.

“Moreover, the government’s rejection of over GH¢1.8 billion in bids could be a reflection of an intentional borrowing strategy—only accepting bids that align with its cost-of-funds targets, rather than over-borrowing at higher rates.”

Additionally, the analyst stated that the stable rates come at a time when Ghana is navigating a challenging economic recovery path, following its recent International Monetary Fund (IMF) program.

“Sustained control over interest rates in domestic borrowing is crucial for debt sustainability and fiscal consolidation, key pillars of the IMF-backed economic reform agenda,” she added.