T-Bills Oversubscribed Despite Falling Short-Term Yields

The Government of Ghana recorded a modest oversubscription in its latest Treasury bills auction despite declining short-term yields that appear to be gradually reducing investor appetite for government securities.

Data released by the Bank of Ghana indicates that the government exceeded its auction target by 7.4 percent, raising GH¢8.73 billion in total bids against a target of GH¢8.13 billion.

However, the government accepted GH¢7.99 billion of the bids submitted by investors.

The latest auction reflects a slowdown in the level of oversubscription seen in recent weeks when investor demand for Treasury bills remained significantly high. Analysts suggest that the slight moderation in demand may be linked to the declining yields offered on short term government instruments.

Treasury bills are widely considered one of the safest investment options in the country because they are backed by the government and carry minimal risk for investors.

Strong demand

The 91-day Treasury bill continued to dominate investor interest during the auction, accounting for a significant portion of the bids submitted.

According to the auction results, bids worth approximately GH¢6.15 billion were tendered for the 91-day bill. Out of this amount, the government accepted about GH¢5.88 billion.

This means that nearly 70 percent of all bids received during the auction were directed toward the 91-day instrument.

Market observers note that investors typically prefer shorter term bills during periods of uncertainty because they offer greater liquidity and allow investors to adjust their portfolios more frequently in response to changes in interest rates.

The continued dominance of the 91-day bill suggests that investors remain cautious and are opting for instruments with shorter maturities rather than locking funds into longer term securities.

Moderate demand

While the 91-day bill attracted the largest share of bids, the 182 day and 364-day bills recorded relatively lower demand.

For the 182-day bill, investors submitted bids totaling about GH¢2.05 billion. Out of this amount, the government accepted approximately GH¢1.68 billion.

The 364-day bill saw even lower participation compared to the shorter maturities. Bids worth GH¢529.46 million were tendered for the one-year instrument, with GH¢480.46 million accepted.

The lower demand for longer dated Treasury bills reflects investor caution as market participants closely monitor movements in interest rates and inflation.

Some analysts also attribute the decline in bids for longer maturities to expectations that yields could change further in the coming months.