The Ghanaian government's recent treasury bills auction ended with a shortfall, as it failed to meet its target for the first time in over two months. According to Bank of Ghana auction data, the government had aimed to raise GHS4.1 billion but ultimately accepted only about GHS1.8 billion of the bids submitted by investors. This development indicates a decrease in investor appetite for government debt, particularly for longer-dated instruments.
The auction results showed that investors tendered a total of GHS3.9 billion across three maturities: the 91-day, 182-day, and 364-day bills. The 91-day bill remained the most popular, attracting GHS2.28 billion in bids, which accounted for 57.8% of the total bids tendered. The government accepted GHS1.8 billion of this amount, while the yield on the 91-day bill stayed flat at 4.69% compared to the previous auction.
In contrast, the 182-day bill drew GHS452.79 million in bids, with its yield easing by 3.0 basis points to 6.48%. The data also revealed that the 364-day bill, which is a longer-dated instrument, received GHS1.2 billion in bids, but only GHS110.52 million was accepted. This significant gap points to weak appetite for longer-dated government paper.
The yield on the 364-day bill fell to 9.98% from 10.10% in the previous week. It is worth noting that some reported figures for the 182-day bill's accepted amount appear inconsistent, with one part of the data suggesting an incorrect figure of GHS110.52 billion. However, based on reliable sources, the accepted amount is in the hundreds of millions rather than billions for the 182-day paper.
Treasury bills are short-term debt instruments used by the government to raise cash for budget funding and day-to-day financing needs. When investors bid below the government's target, it can signal reduced appetite for government debt or a preference for shorter maturities with perceived safer returns amid falling rates.
The declining yields on the 182-day and 364-day bills indicate a trend of easing short-term borrowing costs for the government. However, the latest auction shows that investors are increasingly cautious about locking funds into longer-dated instruments. This development may influence broader borrowing costs, bank lending rates, and returns on savings and investment products tied to government securities.
The Bank of Ghana conducts these auctions on a weekly basis, but the next auction date and any potential adjustments to the target following this week's shortfall remain unspecified. No further guidance on future rate movements or borrowing strategy has been provided. The auction results highlight the government's ongoing efforts to manage its debt and financing needs.
Key points
- The Ghanaian government missed its GHS4.1 billion treasury bills target, raising only GHS1.8 billion due to weaker investor appetite for longer-dated debt.
- The 91-day bill remained the most popular instrument, attracting GHS2.28 billion in bids, while the 364-day bill showed weak investor appetite.
- The declining yields on the 182-day and 364-day bills indicate easing short-term borrowing costs for the government.
