In a significant turnaround following three consecutive weeks of undersubscription, the latest treasury bills auction conducted by the Bank of Ghana has recorded an impressive 17.8% oversubscription This signal renewed investor confidence in the government’s short-term debt instruments.
The auction attracted total bids amounting to GH¢6.53 billion against a target of GH¢5.54 billion. However, the government accepted bids worth GH¢5.97 billion, maintaining its prudent fiscal management approach.
Breakdown of Subscriptions
The 91-day treasury bill remained the most sought-after instrument, accounting for GH¢4.95 billion, or 75.82% of the total bids. Of this amount, the government accepted GH¢4.58 billion.
Similarly, the 182-day treasury bill saw bids totalling GH¢890.81 million, with all bids accepted, reflecting robust demand for the medium-term instrument.
For the 364-day treasury bill, GH¢689 million was tendered, with an uptake of GH¢499.76 million, demonstrating selective acceptance in line with market dynamics.
Declining Interest Rates on Yield Curve
Amidst the strong demand, interest rates for all treasury bills fell significantly, marking a positive shift for government borrowing costs.
The 91-day bill yield dropped by 18 basis points to 14.92%.
The 182-day bill yield declined to 15.55% from 15.68% in the previous week.
The most notable reduction was in the 364-day bill, which saw a sharp decline of 78 basis points, settling at 16%.
Implications for the Economy
The oversubscription reflects heightened investor confidence in the government’s economic policies and fiscal strategies. The declining yields further indicate improving market conditions and reduced risk perception, offering the government a more affordable financing avenue for budgetary needs.
This development also suggests a stabilizing macroeconomic environment, which could support broader economic growth and encourage private sector participation in long-term investments.
The government is expected to maintain this momentum in subsequent auctions, ensuring fiscal discipline while addressing the nation’s financial obligations.
Story by: Mercy Addai Turkson #ahotoronline.com
