Treasury Bill auction undersubscribed for third straight week

The Bank of Ghana's latest data shows the government missed its Treasury bill target again. This is the third consecutive time, falling short by GHS 3.92 billion. The auction had an undersubscription rate of 58.67%. This is a sharp contrast to last week’s full acceptance.

The government aimed to raise GHS 6.68 billion but received only GHS 2.76 billion in bids. The 91-day bill attracted GHS 4.36 billion in bids, with GHS 2.09 billion accepted. For the 182-day bill, GHS 513 million was accepted out of GHS 731 million tendered. The 364-day bill saw GHS 260 million in bids, with GHS 154 million accepted.

The weak uptake led to further declines in yields. The yield on the 91-day bill fell by 5 basis points to 15.11%. The yield for the 182-day bill edged down by 2 basis points to 15.68%. Meanwhile, the yield on the 364-day bill dropped by 1 basis point to 16.79%.

Market analysts believe this weaker investor appetite indicates caution among investors regarding short-term government securities. Concerns may stem from fiscal risks or liquidity constraints, as well as more attractive alternative investments available now.

Falling yields also reduce investor returns, making T-bills less appealing for some investors. This is especially true for those seeking higher returns to offset inflation or currency risks.

Looking ahead, the government plans to target GHS 5.54 billion in its upcoming auction.