T-bill auction bounces back after six-week slump; 111% oversubscription recorded

After six weeks of subdued activity on the treasury market, investor confidence rebounded strongly this week.

Fresh trading data from the Bank of Ghana shows that treasury bills were oversubscribed by 110.84%, signalling a renewed appetite for short-term government securities.

Investors tendered GH¢6.03 billion across the 91-, 182-, and 364-day bills, of which the Treasury accepted GH¢5.78 billion – almost double its GH¢2.86 billion target.

Breakdown of the auction results indicates that the 91-day bill dominated demand, recording GH¢2.57 billion in bids and accepting GH¢2.56 billion.

The 182-day bill followed with GH¢1.64 billion tendered and GH¢1.62 billion accepted, while the 364-day bill attracted GH¢1.81 billion, with GH¢1.58 billion accepted.

The weak issuance target was a key driver, but most importantly the turnaround reflects renewed bank participation following the 350bps policy rate cut to 18%, which compressed returns on the Bank of Ghana’s 56-day bill and redirected liquidity into Treasury bills.

The 91-day rate edged down by 8 basis points to 11.05%, from 11.13% the previous week.

The 182-day bill declined by 25 basis points to 12.43%, while the 364-day bill inched up by 2 basis points to 13.08%.

Looking ahead, the Treasury aims to mobilize GH¢5.80 billion in its next auction across the three tenures.