The Government of Ghana’s latest Treasury bill auction has recorded its seventh consecutive over-subscription of the year, signaling robust investor appetite despite the state’s decision to exercise significant restraint in debt intake.
During last Friday’s auction, investors over-subscribed government’s target of GHC6.415 billion by 253.40 per cent.
Despite the massive influx of cheap liquidity, government maintained a disciplined borrowing stance.
It accepted only GHC8.99 billion of total bids across the 91, 182, and 364-day tenors, rejecting over GHC13 billion, despite investors swarming the market with offers reaching GHC22.670 billion.
Government accepted roughly 40 per cent of the total bids offered but still significantly higher than its initial target of GHC6.415 billion.
This strategy appears to be working, as yields across all tenors saw a downward trend.
For the 91-Day Bill, the shorter-term instrument, attracted bids worth GHC7.640 billion, while government accepted GHC3.414 billion at a yield of 8.61 per cent.
The 182-Day Bill saw investors offering GHC7.266 billion, of which government took only GHC2.088 billion at interest rate of 10.68 per cent.
The one-year paper, 364-Day Bill, saw bids totaling GHC7.762 billion, with government accepting GHC3.489 billion at a yield of 9.96 per cent.
What the market offered represents 353.40 per cent subscription rate and 253.40 per cent over-subscription rate. The persistent over-subscription indicates that investors still view government bills as a safe haven.
By rejecting a large portion of these bids, government is signaling fiscal discipline and a refusal to over-borrow.
This high market liquidity, coupled with government’s capped intake, could push interest rates even lower in the coming weeks.
