Treasury bill yields declined sharply at the first auction in February, driven by strong investor demand and ample liquidity in the money market, which combined to push rates lower.

Data from the Bank of Ghana show that total bids amounted to GH¢17.24 billion, far exceeding the government’s target of GH¢4.98 billion. Of the bids received, the Treasury accepted GH¢5.83 billion, highlighting sustained appetite for short-term government securities.

Demand remained strongest for the 364-day bill for the third straight week, with investors submitting GH¢6.94 billion in bids. The government accepted GH¢2.00 billion from that total. The 91-day bill attracted GH¢6.57 billion in tenders, with GH¢2.52 billion accepted, while the 182-day bill recorded GH¢3.72 billion in bids, of which GH¢1.30 billion was taken up.

Yields declined across all maturities on a week-on-week basis. The 91-day bill fell by 86 basis points to 9.96 percent from 10.82 percent. The 182-day yield eased by 57 basis points to 11.81 percent from 12.38 percent, while the 364-day bill dropped by 76 basis points to 12.06 percent from 12.82 percent.

The pronounced fall in rates reflects excess liquidity in the market, which continues to outstrip the government’s immediate borrowing needs. With total demand exceeding the auction target by about 246 percent, downward pressure on yields was widely anticipated.

Despite the decline, analysts expect investor interest to remain strong in upcoming auctions, supported by favourable liquidity conditions and a continued preference for the 364-day bill, which still offers comparatively attractive returns.

Market watchers also foresee yields continuing to trend lower until they reach levels that dampen investor interest, at which point funds may gradually be redirected toward equities or other higher-yielding assets.

Meanwhile, the government has increased its issuance target to GH¢6.42 billion for the next auction, signalling its ongoing reliance on the domestic money market to meet short-term financing needs.