Investors' interest in T-bills to wane in coming weeks - Report

Investors' interest in treasury bills is expected to decline.

This trend is due to the government's balance between demand management and high-rate bid rejections. This will lead to modest auction results.

Databank Research notes that undersubscriptions are likely. The Monetary Policy Committee raised rates by 100 basis points to 28%. The 273-day bill also absorbs liquidity.

In the last two auctions, bids were undersubscribed. The government rejected some of these bids.

Analysts believe this tightening may slow yield compression in the money market. Institutional offers are decreasing.

Buffer adequacy and reopening longer-dated bond issuances are crucial. These factors will influence near-term yield trends.

Last week’s primary auction saw GH¢4.71 billion in bids. However, the Treasury accepted only GH¢4.11 billion, rejecting GH¢596 million.

Yields on the 91- and 182-day bills fell slightly last week. They dropped by 2 basis points and 20 basis points, reaching 15.71% and 16.73%. The 364-day bill remained steady at 18.84%.

These changes occurred before the MPC's rate hike to 28%. The Bank of Ghana plans to issue a new 273-day bill, which reinforces tighter liquidity conditions.