- The government fell short of its target by GHS 700 million
- Investors demonstrated a preference for short-term bills
- The government plans to reduce its borrowing target for the next treasury bill auction
The government’s auction of weekly treasury bills to domestic investors missed its mark by approximately GHS 700 million.
This shortfall in the sale of short-term instruments is attributed largely to the government’s strategy of maintaining stable yields in recent weeks, aimed at reducing future debt-servicing costs.
The undersubscription in the treasury bills market was evident in the latest auction, where the government aimed to raise GHS 4.78 billion but secured only GHS 4.06 billion.
Specifically, bids were predominantly focused on the 91-day bill, with GHS 2.4 billion tendered and accepted, a decrease from the previous week’s GHS 2.9 billion acceptance.
Additionally, investors bid GHS 1.18 billion for the 182-day bill, all of which were accepted, and GHS 477 million for the 364-day bill, fully meeting the tendered amount.
Overall, the auction saw a 19% undersubscription as interest rates remained stable in the money market, averaging between 24% and 27%. Analysts attribute this undersubscription primarily to the ambitious auction target set by the government.
Looking forward, the government plans to lower its borrowing target to GHS 3.86 billion for the upcoming treasury bill auction, adjusting its strategy based on market conditions and fiscal considerations.
