…As Yields Slide Across All Tenors
Strong investor demand enables Treasury to exceed target by 53.5%, but one-year bill sees limited uptake
The government has raised approximately GH¢4.41 billion from the latest Treasury bill auction, significantly exceeding its GH¢2.87 billion target as investors continued to demonstrate strong appetite for short-term government securities despite declining yields.
The Treasury secured about GH¢1.54 billion more than its target, representing an oversubscription of approximately 53.5%, with the bulk of the accepted bids concentrated in the 91-day and 182-day instruments.
The auction results highlight a market characterised by robust demand for shorter-term government securities, even as returns on all three Treasury bill maturities declined.
However, the relatively low acceptance rate for the 364-day bill suggests that the government remains selective about its longer-term domestic borrowing.
Short-term bills dominate government borrowing
The 91-day Treasury bill emerged as the largest contributor to the government’s latest fundraising exercise, attracting GH¢3.29 billion in tenders, of which GH¢3.01 billion was accepted.
The 182-day instrument also recorded substantial demand, receiving GH¢1.31 billion in bids, with approximately GH¢1.26 billion accepted.
Together, the two shorter-dated instruments accounted for the overwhelming majority of accepted bids, underscoring investors’ preference for shorter investment horizons.
The picture was different for the 364-day bill, which attracted GH¢468 million in tenders but saw only GH¢136 million accepted by the Treasury.
The government therefore accepted less than 30% of the bids submitted for the one-year instrument, indicating a more cautious approach to borrowing at the longer end of the Treasury bill market.
The pattern suggests that while investors are willing to commit funds to government securities, their appetite may vary according to maturity, pricing and prevailing market conditions.
Borrowing costs ease across the yield curve
The strong demand coincided with a further decline in yields across all three Treasury bill maturities, potentially providing some relief to the government’s short-term financing costs.
The yield on the 91-day bill fell to 4.60% from 4.64%, while the 182-day rate declined to 6.28% from 6.32%.
The 364-day bill also recorded a marginal reduction, with its yield easing to 9.75% from 9.80%.
Although the declines were relatively small, the broad-based movement points to investors accepting lower returns across the three maturities.
The 91-day bill remains the cheapest of the three instruments in yield terms, while the one-year bill offers a significantly higher return to investors prepared to lock in their funds for a longer period.
The difference between the two rates stands at 5.15 percentage points, reflecting the substantial premium attached to the longer-dated instrument.
For the government, sustained demand at lower yields could create opportunities to reduce borrowing costs if the trend continues in subsequent auctions.
What the auction means for investors and the economy
The latest results provide a positive signal for the government’s immediate domestic financing efforts, as the Treasury was able to raise more than its stated target without increasing yields on the securities.
However, the amount tendered should not be confused with the amount accepted. The Treasury’s decision to accept only GH¢136 million of the GH¢468 million offered for the 364-day bill demonstrates that excess demand does not automatically translate into higher borrowing across every maturity.
For investors, falling yields mean lower returns for new purchases of Treasury bills, although the securities may remain attractive depending on prevailing inflation, alternative investment opportunities and expectations about future interest rates.
For the government, the key question is whether the current demand conditions can be sustained while yields continue to decline.
Consistent oversubscription accompanied by falling yields could strengthen the Treasury’s position in managing short-term financing requirements. Conversely, a reversal in investor appetite or tighter liquidity conditions could put pressure on borrowing costs.
The next Treasury bill auctions will therefore be closely watched for evidence of whether the government can maintain above-target fundraising while securing progressively cheaper financing.
For now, the latest auction points to favourable demand conditions for government securities, with investors continuing to provide substantial funding even as yields edge lower.
