Investor demand for Ghana’s Treasury bills surged at the October 9 auction, with the government raising GH¢4.40 billion, exceeding its target by 53% as interest in short-term government securities strengthened.
The Bank of Ghana received bids totalling GH¢5.06 billion for the 91-day, 182-day and 364-day Treasury bills, up from GH¢2.93 billion at the October 2 auction. This represents a 73% increase in demand within a week.
The government accepted GH¢4.40 billion of the bids, compared with GH¢1.77 billion at the previous auction, representing a 148% increase in the amount raised. The latest proceeds also exceeded the government’s target of GH¢2.87 billion, which had been raised from GH¢2.24 billion in the preceding week.
The results indicate stronger investor appetite for government securities, alongside a greater willingness by the Treasury to accept available funds. The government took up 86.9% of all bids submitted, compared with 60.6% at the previous auction.
Despite the increase in borrowing, interest rates declined across all three maturities, suggesting that competition among investors helped the government secure additional funds without offering higher returns.
The 91-day Treasury bill remained the most popular instrument, attracting GH¢3.29 billion in bids, up from GH¢2.22 billion a week earlier. The government accepted GH¢3.01 billion, representing 91.4% of the bids submitted for the instrument.
The three-month bill accounted for 64.9% of total bids and 68.3% of the amount raised, although its share of overall demand fell from 75.7% at the previous auction.
The 182-day bill recorded the sharpest increase in demand, with bids rising from GH¢235.19 million to GH¢1.31 billion. The government accepted GH¢1.26 billion, compared with GH¢153.69 million at the previous sale.
The six-month instrument recorded an acceptance rate of 96.3%, the highest among the three maturities. Its share of total bids rose from 8% to 25.8%, indicating a shift in investor interest towards securities with slightly longer tenors.
The instrument offered an interest-equivalent rate of 6.2791%, down from 6.3193% at the previous auction.
However, demand for the 364-day bill presented a different picture. Although bids remained relatively stable at GH¢468.92 million, compared with GH¢474.85 million a week earlier, the government accepted only GH¢136.26 million, a 39.3% decline from the previous auction.
The acceptance rate for the one-year bill fell to 29.1%, significantly below the rates recorded for the 91-day and 182-day instruments.
The outcome suggests a difference between the returns investors sought and the rates the government was prepared to offer. Investors submitted bids at discount rates ranging from 8.8% to 11.5044%, but the government accepted bids only within the narrower range of 8.8% to 8.9916%.
As a result, the 364-day bill accounted for just 3.1% of the total amount raised, down from 12.7% at the previous auction. This indicates that some investors were unwilling to lend to the government for a full year without higher returns.
Weighted average interest-equivalent rates declined across all three instruments. The rate on the 91-day bill fell to 4.6042% from 4.6413%, while the 182-day rate dropped to 6.2791% from 6.3193%. The 364-day rate also declined to 9.7523% from 9.8017%.
The lower rates, despite the sharp rise in demand, suggest the government was able to raise more money without increasing its average borrowing costs. Its decision to reject bids demanding higher returns, particularly on the one-year instrument, also helped contain the cost of borrowing.
The next auction will provide a more significant test of the market’s strength. The government has set a target of GH¢5.02 billion, representing a 74.9% increase over the GH¢2.87 billion target for the October 9 sale.
The new target is GH¢618.69 million higher than the amount raised at the latest auction. Meeting it will require investors to maintain strong participation as the government seeks substantially more funds.
The larger borrowing target could reflect upcoming Treasury bill maturities, other fiscal financing needs, or a combination of both. However, the auction notice does not provide a breakdown of the funding requirement.
The government’s decision to raise more than its target at the October 9 auction may also provide a cash buffer ahead of the next sale, reducing its immediate reliance on the market. However, repeated borrowing above announced targets could make those targets less useful as a measure of the government’s actual financing needs.
Although the latest results point to stronger demand and lower borrowing rates, the maturity structure remains a concern. More than 94% of the accepted funds came from the 91-day and 182-day bills, leaving the government heavily reliant on short-term borrowing.
This exposes the Treasury to frequent refinancing as the securities mature and must be repaid or rolled over. While shorter-term instruments may help contain immediate borrowing costs, they also require the government to return to the market regularly to meet its obligations.
The next auction will therefore be crucial in determining whether the strong demand recorded on October 9 can be sustained. If investors offer more than GH¢5 billion while rates remain stable or decline, it would signal continued appetite for Ghana’s short-term government securities.
However, weaker demand or pressure for higher returns could force the government to reconsider its borrowing plans or accept higher financing costs.
For now, the October 9 auction offers some relief for the Treasury, with stronger demand enabling the government to raise more funds at lower rates, even as investors remain cautious about committing their money for longer periods.
