After four consecutive weeks of missing its target, Ghana’s treasury market has bounced back with a strong performance.
The latest treasury bills (T-bills) auction recorded a 15.8% oversubscription, signaling renewed investor confidence in short-term government securities. According to data released by the Bank of Ghana (BoG), the government received GH¢4.38 billion worth of bids but accepted GH¢4.36 billion, breaking a month-long streak of underwhelming results.
This rebound offers a crucial relief for the government, which relies heavily on domestic borrowing through T-bills to finance its short-term obligations and sustain liquidity within the economy.
Speaking exclusively to Vaultz News, financial market analyst Gifty Annor Sika described the results as “a much-needed confidence booster for both the government and investors.” She noted that “after weeks of poor performance, the oversubscription is a signal that appetite for safe, short-term instruments is alive and well.”
Dominance of the 91-Day Bill
A closer look at the auction results shows the 91-day bill remains the investor favorite. Over 82% of total bids were directed toward this short-term instrument. Specifically, investors tendered about GH¢3.62 billion in bids for the 91-day bill, with the government accepting nearly GH¢3.61 billion.
According to Sika, this overwhelming demand underscores investor caution in the current economic climate. “The preference for 91-day bills reflects investor hesitation to lock funds for longer periods. They want liquidity and flexibility while still earning competitive returns,” she explained.
While the 91-day dominated, the 182-day and 364-day bills also attracted considerable interest. For the 182-day bill, bids totaled GH¢576.7 million, out of which the government accepted GH¢566.7 million. Similarly, the 364-day bill recorded bids worth GH¢187.2 million, with GH¢182 million accepted.
Though smaller in volume compared to the 91-day, the demand across all tenors points to a broader appetite for treasury securities after weeks of weak participation.
“Investors are clearly diversifying their portfolios across maturities. But the figures show that the government still faces challenges convincing investors to hold longer-term debt at current yield levels.”
Gifty Annor Sika
Yield Movements Drive Investor Appetite
The Analyst attributed the renewed interest in the T-bills partly to changes in yields. The yield on the 91-day bill inched up by one basis point to 10.42%, making it slightly more attractive to investors. The 182-day bill yield also rose modestly, from 12.37% to 12.41%.
However, the 364-day bill saw a minor dip in yield, falling by 2 basis points to 12.97%. This decline may explain the relatively lower subscription compared to the shorter-tenor bills.
“Even slight movements in yields can drive investor behavior in the T-bill market. The rise in short-term yields gave investors a reason to come back after weeks of hesitation.”
Gifty Annor Sika
Meanwhile, the oversubscription comes as a much-needed boost for government financing operations. For weeks, the inability to hit auction targets raised concerns about liquidity pressures and the state’s ability to fund short-term expenditures.
By securing more than it initially sought, the government now has additional fiscal breathing space. These proceeds will be instrumental in meeting obligations such as debt servicing, public sector wages, and other immediate expenditures.
“This auction provides the government with critical breathing room, but it also highlights its dependence on short-term borrowing. Without a long-term strategy, the rollover risks could quickly resurface.”
Gifty Annor Sika
Investor Confidence Slowly Returning
The successful auction may also signal a shift in investor sentiment. For weeks, market watchers observed a cautious approach among investors, influenced by broader macroeconomic uncertainties and inflationary pressures. The oversubscription suggests that investors are regaining trust in the government’s instruments, possibly due to improved clarity on fiscal management and short-term monetary stability.
“Confidence is creeping back, but it is fragile,” Sika cautioned. “One or two poorly managed auctions could erase these gains. The government must keep yields competitive and provide clearer policy signals to sustain this momentum.”
While the oversubscription is a welcome development, sustainability remains a key concern. The government will need to maintain investor confidence by keeping yields competitive while managing inflation and exchange rate volatility. Failure to do so could see participation weaken again.
Moreover, heavy reliance on short-term borrowing exposes the government to rollover risks. Experts have emphasized the importance of diversifying financing sources and gradually extending maturities to ease refinancing pressures in the long run.
A Positive Signal Amid Uncertainty
The 15.8% oversubscription of the latest T-bills auction is a positive signal for both government and investors. It reflects a temporary restoration of market confidence after four weeks of weak auctions and demonstrates the resilience of Ghana’s domestic debt market.
As Sika summed up: “This is a step in the right direction, but it’s not victory yet. The government must focus on consistency, sustainability, and fiscal discipline if it wants to keep investor trust.”
For now, the market cheers this breakthrough, offering a much-needed reprieve in an otherwise challenging economic landscape.
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