This week’s GH¢987 million issue of Government Treasury Bills has been oversubscribed by 8.8 percent, amounting to GH¢1.07 billion with the government gaining an additional GH¢86.5 million.
The bills, carrying a maturity of 91 days and 182 days, are issued by the Central Bank on behalf of the government hence, the Bank of Ghana, which manages the government’s borrowing programme accepted all bids for the 91/182-Day bills
The Bank of Ghana further asserted that the range of rates have remained fairly stable with the bid rates and the discount rates lingering around the same average but are lower than the interest rates.
The weighted average interest rate hovered around 14.09 percent for the 91-Day bill compared to 14.11 percent of the previous issue. Also, for the 182 Day-bill average interest rate remains unchanged from previous week lingering at 14.16 percent and marginally higher than the 91- Day bill interest rate.
Contrarily, for three consecutive weeks running, government missed its treasury bill sales target, losing sales worth GH¢112.82 million, GH¢827.25 million and GH¢109.26 million respectively depicting a short fall of approximately 13.24 percent, 46 percent and 10.81 percent correspondingly.
Detailing the government securities auction made, the government auctioned GH¢951.28 million in three-month bills dominating the treasury bill sales with an approximate average price of 13.60 percent with the lowest accepted price being 13.55 percent and the highest being 13.65 percent.
For the six-month bills, GH¢122.19 million was auctioned at a discount rate extending from 13.20 percent to 13.25 percent per annum, showing investors preference for the 91-Day bill.
Highlighting on the upcoming auction of Government of Ghana securities to be held on Monday, 11th January, the Bank of Ghana intimates a predicted weighted average discount rate and interest rate per annum of 13.61 percent and 14.09 percent respectively for the 91 Day bill, 13.21 percent and 14.14percent for 182 Day bills correspondingly, for the period starting from, 11th – 15th January 2021.
The money markets has indeed entered the New Year in an ebullient mood as Investors’ confidence boost despite the economic devastation wrought by the coronavirus pandemic, suggesting that the economy seems to be picking up in the deepest global crises in a century.
With the introduction of the recent guidelines to having a well-structured and well-functioning money market aimed at strengthening the primary dealership system, this will help in facilitating the development of the fixed income market and at the same time, creating a stable environment for the Government Securities market in which private sector investors could readily meet their investment needs.
“Only financial institutions authorised by the [Bank of Ghana] shall be eligible to participate in the wholesale auction as Primary Dealers.
“Interested investors can buy or sell securities in the secondary market through accredited depository participants”.
In 2021, however, analysts anticipate that there is the risk of a stronger than expected rise in inflation fuelled by unprecedented levels of monetary and fiscal stimulus, and the spike in demand once vaccines are widely distributed.
