Government misses Treasury bill target after rejecting high-yield bids

Investor appetite for Treasury bills remained strong last week, but the government failed to meet its fundraising target after rejecting a portion of bids submitted at higher interest rates.

Data released by the Bank of Ghana showed that investors tendered a total of GH¢4.16 billion across the 91-day, 182-day and 364-day Treasury bill auctions. However, the Treasury accepted GH¢3.16 billion, falling short of its GH¢3.37 billion target.

The accepted amount was GH¢207.73 million below the target, representing an under-subscription rate of 6.2%.

Despite attracting bids that exceeded its financing requirement, the government declined to accept all offers, opting instead to reject bids carrying relatively higher yields in an effort to contain borrowing costs.

The 364-day Treasury bill attracted the highest investor interest, with bids amounting to GH¢1.86 billion. Out of that total, the Treasury accepted GH¢1.10 billion.

The 91-day bill received GH¢1.69 billion in bids, of which GH¢1.63 billion was accepted. Meanwhile, the 182-day bill recorded GH¢618.90 million in bids, with GH¢435.82 million accepted.

The latest auction marks a significant shift from the previous week’s performance, when the government recorded an oversubscription of 60.2%. The change points to evolving market conditions, as investors seek higher returns amid persistent inflation concerns, rising government borrowing needs and expectations of further monetary policy easing.

Treasury bill yields continued to edge higher across all tenors. The yield on the 91-day bill increased to 5.87% from 5.73% the previous week, while the 182-day bill rose to 7.79% from 7.69%. The yield on the 364-day bill also climbed to 12.93%, up from 12.82%, reflecting stronger investor demand for higher returns, particularly on longer-term securities.

The government is expected to return to the market this week with plans to raise GH¢5.67 billion through its next Treasury bill auction to support its short-term financing needs.