Government raises GH¢4.41bn in T-bills, surpasses target by 53%

The government has raised approximately GH¢4.41 billion in its latest Treasury bill auction, exceeding its target by 53.5% as investor demand remained strong and yields declined across all three maturities.

The Treasury had targeted GH¢2.87 billion but accepted about GH¢4.41 billion in bids for the 91-day, 182-day and 364-day Treasury bills, reflecting sustained investor appetite for government securities despite declining returns.

The auction results indicate that the government continues to attract significant demand for short-term financing, while borrowing costs have eased marginally across the yield curve.

91-day bill dominates investor demand

The 91-day Treasury bill attracted the highest volume of bids, receiving GH¢3.29 billion in tenders, of which GH¢3.01 billion was accepted.

The 182-day instrument attracted GH¢1.31 billion in bids, with the government accepting GH¢1.26 billion.

Demand was comparatively weaker for the 364-day Treasury bill, which received GH¢468 million in tenders. The Treasury accepted just GH¢136 million, less than a third of the amount offered.

The acceptance pattern suggests that the government relied heavily on shorter-dated securities to meet its financing needs while taking a more selective approach to borrowing through the one-year instrument.

Treasury bill yields decline

Yields fell across all three maturities, extending the downward movement in government borrowing costs.

The yield on the 91-day Treasury bill declined to 4.60% from 4.64%, while the rate on the 182-day instrument eased to 6.28% from 6.32%.

Similarly, the yield on the 364-day Treasury bill dropped to 9.75% from 9.80%.

Although the declines were modest, the latest results suggest that investors were willing to accept slightly lower returns on government securities.

The yield gap between short- and longer-dated instruments, however, remains significant. The 364-day bill offers a return of 9.75%, compared with 4.60% on the 91-day instrument, reflecting the higher yield available to investors committing their funds for longer periods.

Implications for government borrowing

The combination of above-target borrowing and declining yields could provide some relief to the government’s short-term financing efforts if investor demand remains strong in subsequent auctions.

Strong demand enabled the Treasury to raise substantially more than its target, although the relatively low acceptance rate for the 364-day bill points to a more cautious approach to longer-term borrowing.

For investors, the declining yields mean lower returns on newly issued Treasury bills, particularly at the shorter end of the market. However, the higher yield on the 364-day instrument may continue to appeal to investors seeking better returns in exchange for committing their funds for a longer period.

Future auction results will be crucial in determining whether yields continue to decline and whether the government can sustain its borrowing at lower costs.

For now, the latest auction points to favourable demand conditions for government securities, supported by strong subscriptions and easing yields. The sustainability of this trend will depend on investor appetite, market liquidity and the government’s financing requirements.

Source: Sekunde FM