- Treasury bill yields declined across all maturities at the first auction in February
- Total bids of GH¢17.24 billion exceeded the government’s target by over 240 percent
- The Treasury accepted GH¢5.83 billion, reflecting strong investor appetite
Treasury bill yields declined sharply at the first auction in February, as strong investor demand and high liquidity levels in the money market placed downward pressure on interest rates.
Data from the Bank of Ghana showed that total bids amounted to GH¢17.24 billion, far exceeding the government’s target of GH¢4.98 billion. Out of the bids received, the Treasury accepted GH¢5.83 billion, reflecting strong investor appetite for short-term government securities. The 364-day bill continued to dominate demand for the third consecutive week, attracting GH¢6.94 billion in bids, of which GH¢2.00 billion was accepted.
The 91-day bill received GH¢6.57 billion in tenders, with GH¢2.52 billion accepted, while the 182-day bill attracted GH¢3.72 billion in bids, out of which GH¢1.30 billion was taken up.
On a week-on-week basis, yields declined across all maturities. The yield on the 91-day bill fell by 86 basis points to 9.96 percent from 10.82 percent. The 182-day bill dropped by 57 basis points to 11.81 percent from 12.38 percent, while the 364-day bill declined by 76 basis points to 12.06 percent from 12.82 percent.
The sharp drop in yields was largely driven by excess liquidity in the market, which significantly exceeded the Treasury’s financing needs. With demand surpassing the issuance target by about 246 percent, a downward adjustment in rates was widely anticipated.
Despite the decline in yields, analysts expect investor participation to remain strong in upcoming auctions, supported by favourable liquidity conditions and a continued preference for the 364-day tenor, which still offers relatively attractive returns.
Analysts also project that yields may continue to trend lower until they reach levels that dampen investor interest, at which point some funds could gradually shift into equities or other higher-yielding investment options.
For the next auction, the government has increased its issuance target to GH¢6.42 billion, highlighting its ongoing reliance on the domestic money market to meet short-term funding needs.
