Government Treasury Bills Auction Exceeds Expectations with 9% oversubscription

The Ghanaian government has recorded a 9% oversubscription in its final Treasury bills auction for 2024, signaling fluctuating investor confidence following the general elections. Data from the Bank of Ghana reveals that the auction secured a total of GH¢4.6 billion, surpassing the target of GH¢4.3 billion by GH¢383 million.

The 91-day Treasury bill dominated the auction, attracting bids worth GH¢3.8 billion, while the 182-day bill contributed GH¢628.16 million, accounting for 13.5% of the total bids. The 364-day bill brought in GH¢179.37 million, representing 3.36% of the total.

This marginal oversubscription came at a cost, as Treasury bill rates saw another consecutive hike. The interest rate for the 91-day bill edged up from 27.85% to 28.03%, while the 182-day bill rose from 28.68% to 28.88%. The 364-day bill also increased, moving from 29.97% to 30.07%.

The results highlight a blend of investor optimism and caution, with higher yields seemingly driving demand despite the rising cost of borrowing. This performance wraps up the year for the government’s short-term debt market strategy, setting the stage for 2025.

Treasury bills have become the government’s primary financing tool after losing access to international capital markets and facing successive sovereign credit downgrades. This shift was further exacerbated by the local debt market’s stagnation following the domestic debt exchange program announced in December 2022.

Databank’s 2025 outlook projects that the government may reduce T-bill issuances by up to GHS 20 billion, bringing the total stock to around GHS 200 billion as alternative funding sources are explored. Meanwhile, the incoming administration of President-elect John Mahama has signaled a strong commitment to fiscal consolidation, which could lower demand and yields for short-term instruments, albeit with plans to scrap the E-levy and COVID-19 levy.