Treasury bill bids were undersubscribed causing the government to fall short of its target amount by 21.5 percent for the week at the latest Government of Ghana (GOG) Securities Auction.
According to the results presented by the Bank of Ghana, the total amount of the 91/182 Day Bill summed up to approximately GH¢773.71 million bids falling below the stipulated target amount of GH¢985 million, leaving the government with no option but to accept all bids tendered by banks.
This implies that the 91/182 T-Bill securities lost sales of GH¢211.29 million, representing a sharp decline and contrary to results of past auctions held where T-Bill auctions exceeded the targeted amount. For instance, the last auction held saw 91/182 T-Bill securities making extra sales of GH¢350.22 million.
The GH¢773.71 million bids tendered is also lower than the last auction’s stipulated targeted amount of GH¢783 million, the Bank of Ghana remarked.
Detailing the Treasury Bill sales made, although sales made were not impressive compared to past auctions, the Bank of Ghana intimated that out of a total amount of GH¢773.71million Treasury bill bids tendered, the 91-Day Bill dominated the sales amounting to GH¢674.62 million, bringing in approximately 87 percent.
Though the remaining 13 percent, constitutes the 182 Day Bill making a minimal amount of GH¢99.09 million, it surpasses the previous auction’s amount of GH¢98.53 million, the Bank of Ghana mentioned.
The Bank of Ghana further asserted that in the month of November the range of rates have remained fairly stable for three weeks running. The range of bid rates and the discount rates lingers around the same average but are lower than the interest rates. The bid rates for the 91-Day Bill reached between 13.4 and 13.65 percent per annum, and then from 13.87 to 14.13 percent per annum for interest rates. The 182 Day Bill also shows a similar but a marginally smaller range of bid rates and a higher interest rate than the 91 Day-Bill. It had an interest rate extending from approximately 14.02 and 14.19 percent per annum, while its range of rates for bids lay between about 13.1 and 13.25 percent per annum.
A summary of the previous tender held for treasury bills revealed that the 91/182 Treasury bills sold a total amount of GH¢ 1,133.22 million, which is the same as the tendered amount but exceeding the stipulated target of GH¢783 million by 44.7 percent, the Bank of Ghana opined.
Also, the government issued bonds aside the Treasury bill sales. A 7-year Ghana Cedi bond worth GH¢1027.43 million and a 3-year US Dollar bond worth $388.9 which were both ‘senior unsecured’ with a ‘bullet’ principal payment period were tendered, the Bank of Ghana added.
Highlighting on the upcoming auction of Government of Ghana securities to be held on 23rd November, the report indicates a total target amount of GH¢984 million for 91/182/364 Treasury bills. Also, the report predicted a weighted average discount rate and interest rate per annum of 13.59 percent and 14.07 percent respectively for the 91 Day bill, 13.2 percent and 14.13 percent for 182 Day bills correspondingly, for the period starting from today, 23rd – 27th November 2020.
The Bank of Ghana has alerted that “The GOG Securities Wholesale Auction is opened to only Primary Dealers” who are obliged to act as “market makers in GOG Securities”.
Finally, the Bank of Ghana cautions that “The investing Public interested in purchasing or selling GOG Securities may do so on the Secondary Market (Ghana Fixed Income Market) through Depository Participants (including Primary Dealers)”.
