Ghana’s government has reduced its Treasury bill borrowing despite receiving offers exceeding its target, signalling a growing reluctance to accept higher interest rates demanded by investors.
Results from the Bank of Ghana’s October 16 auction show that investors submitted GH¢5.17 billion in bids for 91-day, 182-day and 364-day Treasury bills, surpassing the government’s GH¢5.02 billion target by GH¢154.10 million.
However, the Treasury accepted only GH¢3.48 billion, leaving approximately GH¢1.69 billion in bids unaccepted. The amount raised was 20.86 per cent lower than the GH¢4.40 billion accepted at the previous auction on October 9, despite a 2.20 per cent increase in total bids.
The outcome suggests that the reduction in borrowing was driven less by weak investor demand than by the government’s decision to reject offers it considered unfavourable.
The latest auction also saw the government accept only 67.32 per cent of the total bids received, down from 86.93 per cent a week earlier. This indicates a more selective approach to borrowing as the Treasury balances its financing needs against the cost of servicing public debt.
The 91-day bill attracted the strongest demand, drawing GH¢2.94 billion in bids. Government accepted GH¢2.20 billion, representing an acceptance rate of 74.80 per cent, the highest among the three maturities.
The short-term instrument recorded a weighted average discount rate of 4.5707 per cent, equivalent to an interest rate of 4.6235 per cent. However, about GH¢742.06 million in offers was rejected, indicating that strong demand alone was not enough to guarantee acceptance.
The preference for shorter-term bills reflects investors’ desire to retain flexibility amid changing interest-rate conditions. Such securities also allow investors to reinvest their funds sooner rather than commit their money for longer periods.
Demand for the 182-day bill reached GH¢1.11 billion, but the government accepted GH¢692.30 million, representing 62.38 per cent of the offers received. The bill recorded a weighted average discount rate of 6.1221 per cent, equivalent to an interest rate of 6.3154 per cent.
Approximately GH¢417.54 million in bids for the six-month instrument was rejected, reinforcing the Treasury’s cautious approach across different maturities.
The 364-day bill faced the strictest acceptance conditions. Although investors submitted GH¢1.12 billion in bids, the government accepted only GH¢587.61 million, giving the instrument an acceptance rate of 52.52 per cent.
The one-year bill recorded a weighted average discount rate of 8.8535 per cent, equivalent to an interest rate of 9.7135 per cent. About GH¢531.11 million in offers was rejected.
The relatively low acceptance rate suggests that the government was unwilling to commit to the full amount of longer-term financing at the rates investors were demanding. While longer maturities can reduce the frequency of refinancing, they generally come with higher borrowing costs.
The auction maintained an upward-sloping yield structure, with interest-equivalent rates rising from 4.6235 per cent for the 91-day bill to 6.3154 per cent for the 182-day bill and 9.7135 per cent for the 364-day bill.
This means investors continued to demand higher returns for lending to the government over longer periods, while the Treasury became increasingly restrictive in accepting bids as the maturity period extended.
Although the available results do not provide the previous auction’s weighted yields for a reliable week-on-week comparison, they show that the government raised less than its target despite sufficient investor offers.
Attention now turns to Tender 2030, for which the government has set a reduced target of GH¢3.80 billion. This is GH¢1.22 billion, or 24.33 per cent, below the October 16 target, although it remains GH¢315.61 million above the amount raised at that auction.
The lower target could indicate an effort to align borrowing plans more closely with the rates the Treasury is prepared to accept, rather than meeting financing targets at potentially higher costs.
The next auction will provide a clearer indication of whether investors are willing to adjust their rate expectations, particularly for the one-year bill, or whether the government will continue rejecting a significant share of the offers it receives.
While the latest results point to sustained investor interest in government securities, the government’s approach carries its own risks. Rejecting expensive bids may help contain immediate borrowing costs, but relying heavily on short-term bills means the Treasury must return to the market more frequently to refinance maturing debt.
The challenge will be to maintain borrowing discipline without creating additional refinancing pressure or triggering a sharp rise in yields in future auctions.
