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Interest rates hit 34%; government T-bills undersubscribed by 34%


Interest rates on government securities shot up to 34% last Friday, October 28, 2022, but government failed to achieve its target in the latest Treasury bills auction.

This may be due to investor concern about the probability of a debt restructuring by government before a programme can be secured from the International Monetary Fund (IMF).

Despite the rising yield on the treasury market, investors are mindful of the current economic situation in the country.

The IMF and the World Bank are yet to outdoor the nation’s debt situation, whether it is sustainable or not, but there are analyses that the government would restructure its debt.

Already some investors are adopting the wait-and-see attitude before acquiring government securities and making commitments to other collective investment instruments.

According to data from the Bank of Ghana, the interest rate on the 182-day T-bill hit 34.2%, from 33.07% the previous week.

That of the 91-day bill also surged by 0.55% to 32.70%. The one-year bill sold at a rate of 33.35%. Meanwhile, the sale of the T-bills was undersubscribed by 34%, a figure which government should be worried about because it was seeking to raise ¢1.12 billion to refinance maturing short-term securities of up to about ¢1.003.

For now, this shortfall means the government will have to do more to raise enough revenue to offset this deficit.

SecuritiesBids Tendered (GH¢)Bids Accepted (GH¢)
 91 Day Bill 496.97 million 496.65 million
182 Day Bill154.19 million 152.37 million
 365 Day Bill  52.40 million 52.40 million
   
   
   
   
Total703.56 million701.42 million
Target1.124 billion1.124 billion

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