The government has recorded its fourth consecutive oversubscription at the weekly treasury bills auction, underscoring sustained investor appetite for short-term government securities.
At the latest auction, the government targeted GH¢3.7 billion but received total bids worth GH¢5.6 billion, representing an oversubscription of about 47.7 percent. Out of the total bids tendered, GH¢5.3 billion was accepted, reflecting strong confidence in government instruments amid a declining interest rate environment.
The continued oversubscription trend suggests that investors remain comfortable locking funds into treasury instruments despite falling yields. Market analysts say the development reflects improved liquidity conditions in the banking sector and growing expectations of macroeconomic stability.
Demand at the auction was strongest at the short end of the yield curve. A little over 45 percent of the total bids were concentrated in the 91-day treasury bill, confirming investor preference for shorter-tenor instruments. Bids tendered for the 91-day bill amounted to about GH¢2.5 billion, while the government accepted GH¢2.3 billion.
The strong interest in the 91-day bill reflects investors’ desire for flexibility and quick reinvestment opportunities, especially in a market where yields are trending downward. Short-term bills also allow investors to manage interest rate risk more effectively as expectations of further rate adjustments persist.
Solid Uptake for 182-Day Treasury Bills
The 182-day bill also recorded healthy demand, although it trailed the 91-day instrument. Total bids tendered for the six-month bill stood at approximately GH¢1.52 billion, out of which GH¢1.45 billion was accepted by the government.
Market watchers note that the steady demand for the 182-day bill signals balanced investor sentiment. While some investors prefer the safety and liquidity of shorter tenors, others are willing to commit funds for slightly longer periods to secure comparatively higher yields within the short-term spectrum.
The one-year 364-day bill continued to attract robust demand, with GH¢1.538 billion worth of bids tendered at the auction. The government accepted nearly all the bids, amounting to about GH¢1.533 billion.
The near-total acceptance rate for the 364-day bill suggests that the government was comfortable with the pricing offered by investors. It also highlights sustained interest from institutional investors such as pension funds and insurance companies that typically prefer longer tenors to match their liability structures.
Interest Rates Decline Across the Yield Curve
Alongside the strong demand, interest rates declined across all tenors at the auction. The yield on the 91-day bill dropped by 3.0 basis points to 11.08 percent. The 182-day bill also saw a reduction, with yields falling to 12.43 percent from 12.54 percent the previous week.
The most significant movement was recorded on the 364-day bill, where yields declined by 17 basis points to 12.91 percent. The broad-based decline in yields reflects strong competition among investors and reduced pressure on the government to offer higher rates to attract funds.
Analysts attribute the persistent oversubscription to a combination of improved liquidity in the financial system and declining inflation expectations. With fewer attractive alternative investment options in the short term, treasury bills continue to be seen as a safe and predictable store of value.
The trend also aligns with ongoing efforts by the Government of Ghana to manage borrowing costs by leveraging strong demand conditions. Lower yields help reduce interest expenses and ease pressure on public finances, especially as the government continues to roll over maturing instruments.
Implications for Borrowing and the Economy
The fourth consecutive oversubscription signals a positive outlook for government financing in the near term. Strong demand allows the state to meet funding needs without resorting to aggressive rate hikes. This, in turn, supports broader macroeconomic stability and enhances investor confidence in the domestic debt market.
For investors, however, falling yields may gradually reduce returns on treasury bills. This could prompt a gradual shift toward longer-tenor instruments or alternative investments if yields continue to decline in the coming weeks.
Market participants expect demand for treasury bills to remain strong in the short term, particularly if inflation continues to moderate and liquidity remains ample. While yields may continue to edge lower, treasury bills are likely to retain their appeal as low-risk instruments for both institutional and retail investors.
As the government navigates its financing needs, the sustained oversubscription trend offers breathing space to pursue fiscal consolidation while maintaining market confidence.
READ ALSO: CRC’s Recommendation Radical but Necessary – Mahama Signals Firm Action
