Investor appetite for government securities remained robust at the latest Treasury bills auction, with total bids exceeding the government’s target by 246 percent, even as interest rates declined sharply across the yield curve.
The government had set a reduced borrowing target of GH¢4.9 billion for the auction, but total bids tendered reached an estimated GH¢17.2 billion, underscoring sustained liquidity in the financial system and strong demand for short-term risk-free instruments. Out of the bids received, the government accepted GH¢5.8 billion, marginally above the target.
Auction results published by the Bank of Ghana show that investor preference continued to tilt towards longer-dated instruments, with the 364-day bill accounting for the largest share of total bids. Approximately GH¢6.9 billion was tendered for the one-year bill, representing about 40.2 percent of total bids. However, only GH¢2.0 billion was accepted, reflecting the government’s cautious borrowing stance amid easing financing pressures.
Demand for the 91-day bill remained strong, with GH¢6.5 billion in bids submitted, of which GH¢2.5 billion was accepted. The 182-day bill attracted bids of GH¢3.7 billion, with a little over GH¢1.3 billion taken up.
Market analysts say the selective acceptance of bids, despite heavy oversubscription, signals improved cash management by the government and reduced urgency to borrow aggressively, compared to previous periods of fiscal stress.
Meanwhile, interest rates fell sharply across all tenors, reinforcing expectations that yields are gradually realigning with the Bank of Ghana’s recent monetary policy easing. The yield on the 91-day bill declined by 86 basis points to 9.96 percent, pushing short-term rates firmly into single-digit territory.
Similarly, the 182-day bill yield dropped to 11.81 percent from 12.38 percent, while the 364-day bill eased by 76 basis points to 12.06 percent.
The decline in yields reflects a combination of strong demand, ample system liquidity and improving macroeconomic sentiment, following recent policy rate adjustments and easing inflationary pressures. Analysts note that investors appear increasingly willing to accept lower returns in exchange for safety, amid limited alternative investment options with comparable risk profiles.
The sustained oversubscription also suggests that domestic banks and institutional investors continue to recycle excess liquidity into government securities, even as returns compress. Over the medium term, falling Treasury yields could reduce the government’s domestic debt servicing costs, while also exerting downward pressure on lending rates across the broader economy.
However, some analysts caution that persistently lower yields may challenge fixed-income investors, including pension funds, to rebalance portfolios in search of higher returns, potentially shifting interest towards longer-dated bonds or private sector instruments.
SECURITIES | BIDS TENDERED (GH¢) | BIDS ACCEPTED (GH¢) |
91 Day Bill | 6.57bn | 2.52bn |
182 Day Bill | 3.72bn | 1.30bn |
364 Day Bill | 6.94bn | 2.00bn |
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|
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Total | 17.24bn | 5.82bn |
Target | 4.97bn |
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