Investors showcased significant confidence in Ghana’s treasury bills in March 2025, submitting bids totaling GH¢47.5 billion. This remarkable figure surpassed the government’s gross target for the month by an impressive 47.2%.
Despite the high demand, the government recorded its first undersubscription in 13 weeks during the final two auctions. This was largely due to its rejection of expensive bids to maintain fiscal discipline. In total, GH¢29.8 billion worth of bids were accepted, falling short of the GH¢32.2 billion indicative target by GH¢2.4 billion, representing a 7.5% shortfall.
Decline in Yields Alters Market Dynamics
The demand for treasury bills softened throughout March, as investors reassessed their fund allocations amid a significant decline in nominal yields. Yields on treasury bills fell sharply, with the 91-day yield plummeting by 877 basis points to 15.71%. Similarly, the 182-day and 364-day yields dropped by 865 and 845 basis points to settle at 16.73% and 18.84%, respectively.
On average, yields declined by 863 basis points in March, marking one of the steepest drops in recent months. However, there were signs of stabilization towards the end of the month, suggesting that the sharp declines might taper off.
Analyst Outlook
Market analysts at IS Insights believe the scope for further yield declines is narrowing. They attribute this to the current 17.1% average yield, coupled with anticipated disinflation in the second half of 2025.
“The Treasury’s ongoing efforts to curb spending are expected to limit borrowing requirements, stabilizing yields at current levels. If inflation continues to decline sufficiently in the second half of 2025, we anticipate yields could further drop to the low-to-mid teens,” IS Insights stated.
April Borrowing Plans
In line with its fiscal strategy, the government plans to borrow GH¢6.68 billion through treasury bills on Friday, April 11, 2025. This includes the issuance of 91-day, 182-day, and 364-day bills to refinance GH¢6.43 billion in maturing bills.
This measured approach highlights the government’s commitment to balancing its borrowing needs while ensuring sustainable yields in the treasury market. As the market adapts to the evolving dynamics, both investors and policymakers will be closely monitoring inflation trends and fiscal developments in the months ahead.
Story by: Mercy Addai Turkson #ahotoronline.com
