Yields on Treasury bills (T-bills) have witnessed a downward trend in the latest auction, with the government falling short of its target by GHS232.7 million.
According to the latest data from the Bank of Ghana, investors displayed reduced interest in T-bills, submitting bids totalling GHS4.48 billion against a GHS4.72 billion target.
The figures reveal that the majority of bids came from the 91-day bill, with investors tendering GHS3.54 billion for the 3-month financial instrument. The government accepted all these bids.
Additionally, total bids worth GHS782 million were received and accepted for the 182-day bill. For the 364-day bill, the government accepted all bids worth GHS165.36 million.
Overall, the auction saw a 5 per cent undersubscription as interest rates continued to decline, averaging between 24 and 27 per cent. Market analysts attribute this to the significantly large auction target compared to the previous week.
They also note that liquidity levels have weakened following the dynamic Cash Reserve Ratio directive, prompting investors to diversify away from T-bills.
Despite the undersubscription, analysts believe that the weighted average rates for the week indicate competitive bidding and investor confidence in government securities. Looking ahead, the treasury aims to increase its borrowing target to GHS5.31 billion in the next T-bill auction.
