T-bills oversubscription may be an indication of growing confidence in the market - Analyst

A financial analyst, Courage Boti, has explained that the increasing subscriptions being witnessed on the primary markets and secondary markets may just be an indication of growing confidence in the economy.

According to him, the oversubscription of treasury bills witnessed in the last few weeks may continue.

He explained that this is due to the successful completion of the second round of the government’s debt exchange programme including pension funds, dollar-denominated bonds, and cocoa bills.

Even though the government’s recent treasury bill target seemed ambitious due to the high interest rates currently, it has witnessed oversubscriptions.

Courage Boti was quoted by citinewsroom.com saying, “Now the government has paid coupons on the first DDEP bonds. It is the first step towards restoring confidence. We also know that the government succeeded in rolling out pension funds into the DDEP and that settlement has begun; what this may mean is that there could be more activities on the secondary bonds market and evaluations turn out to favorable, you may witness some gradual activities returning to that segment of the market.”

Overall, the government’s second round of debt restructuring saw an average success rate of about 92%.

The government announced this last week while noting that “this result is a significant achievement for the Government to implement fully the economic strategies in the post-COVID-19 Programme for Economic Growth (PC-PEG) during this current economic crisis.”

This week, the government surpassed the target of GH¢3.064 billion to raise GH¢3.53 billion as interest rates continue to surge.

For the past two weeks, the government has managed to surpass its treasury bill targets even though they were ambitious.

According to the results, the target was oversubscribed by GH¢462.83 million. Interest rates are currently hovering between 27.36 to 31.65%.

However, the continuous increase in the interest rate will make maturities expensive for the government to fulfill.