Government securities continued to attract strong investor appetite, with the latest treasury bills auction oversubscribed by 253 per cent as falling interest rates boosted demand and reduced borrowing costs.
According to auction results released by the Bank of Ghana, total bids reached GH¢22.67 billion, significantly exceeding the government’s target of GH¢6.41 billion.
However, the government accepted GH¢8.99 billion of the bids and rejected approximately GH¢13 billion, reflecting a selective borrowing strategy aimed at managing debt costs.
Strong Demand Across All Tenors
Investor demand was robust across all maturities, with the 364-day treasury bill attracting the highest volume of bids. A total of GH¢7.76 billion was tendered for the one-year bill, of which GH¢3.48 billion was accepted.
Similarly, the 91-day bill recorded GH¢7.64 billion in bids, with GH¢3.41 billion accepted, while the 182-day bill saw GH¢7.26 billion tendered, of which GH¢2.08 billion was taken up.
The strong participation underscores sustained investor confidence in short-term government instruments, amid improving macroeconomic conditions and declining yields.
Interest Rates Decline Sharply
Interest rates fell significantly across all maturities, reducing the government’s cost of borrowing.
The yield on the 91-day bill dropped sharply by 136 basis points to 8.60 per cent, while the 182-day bill declined to 10.67 per cent from 11.81 per cent.
The 364-day bill also saw its yield fall by 100 basis points to 11.06 per cent.
The decline in yields reflects increased demand for government securities and improved liquidity in the financial system, allowing the government to refinance its obligations at lower cost.
Lower Borrowing Costs Signal Improving Market Conditions
The oversubscription trend suggests that investors continue to favour treasury bills as a relatively safe investment option, even as yields decline.
The government’s decision to reject a significant portion of bids also indicates efforts to limit excessive borrowing and manage debt sustainability while taking advantage of favourable market conditions.
Analysts say sustained investor demand and falling yields could support fiscal consolidation efforts by reducing interest expenses and easing pressure on public finances in the near term.
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