The Government shook off the recent streak in missed targets in the Treasury bills sale, as the short-term securities were oversubscribed by a marginal 0.07% to Gh¢982.73 million in the latest January 10th auctioning by the Bank of Ghana.
Treasury Bills are a key financial instrument that helps the government finance the national debt, thus, the recent drop in targets was cause for alarm, as it may have pushed the government’s debt management program off track. However, with the recent marginal oversubscription, the government can now breathe a sigh of relief as it has now broken the sequence of the short-term securities under subscription jinx.
The government intends to borrow more from the domestic market this year than from the international market to decrease the cost of the nation’s debt burden.
According to the statistics from the Bank of Ghana, the Government mobilized GH¢ 865.52 million from 91-day T-Bill and GH¢ 117.21 million from the 182-day T-Bills.
Once again, the investors showed more interest in the 91-day Treasury Bills, as they subscribed about GH¢ 865.52 million of the investment Bill. The three-month Bill was auctioned at 12.5249%, a little drop from the previous auction rate of 12.5256. This is particularly favorable news for the government, as its total interest payments will reduce by 0.0007 percentage points when compared to the previous auction week’s interest cost. Regardless of how little the drop is, it will save the government money on interest costs on domestic market. The lowest rate for which investors were willing to trade for the Bill was 12.37% and the highest those investors were willing to trade was 12.58%.
The investors, largely banks also bought about GH¢117.21 million of the half-a-year Bill because of the higher interest yield. The six-month Bill was auctioned for 13.20 percent of its face value denoting a decrease in its previous auction rate of 13.21 per cent. This reduces the financing obligation of the government by 0.01 percentage points. The least rate at which investors were willing to trade for the Bill was 13 percent, while the highest rate at which they were willing to trade was 13.33 percent.
Conversely, the 2-year Foreign Exchange rate (FXR) and the 1- year bill, had a dull week, as no Bills were tendered for them, and none were accepted by government.
Discounted rates for the Short-term Securities
The discounted rate, or the amount investors earn when they buy an investment bill, was 12.1446 percent for the 91-day Bill, compared to 12.1453 percent in the last auction on January 3rd. The 91-day bill had a lowest discounted rate of 12% and the highest discounted rate of 12.20%.
The 182-day Bill was auctioned at a discounted rate of 12.38 per cent. The lowest discounted rate for the 182-day Bill was 12 per cent and the highest for the Bill was 12.50 per cent.
The Central bank announced that the government of Ghana’s total target for the 91-day Bill and the182-day Bill and the 364-day Bill is GH¢ 1.05 billion for the next auction.
Investors should keep in mind, however, that the GOG Securities Wholesale Auction is exclusively open to Primary Dealers.
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