The Government of Ghana has rejected GH¢873.94 million in bids for Treasury bills despite receiving offers above its borrowing target, as interest rates declined across all three maturities at the latest auction.
Results released by the Bank of Ghana show that investors tendered GH¢4.27 billion for the 91-day, 182-day and 364-day Treasury bills at the October 23 auction, exceeding the government’s target of GH¢3.80 billion. However, the Treasury accepted only GH¢3.39 billion, leaving a funding shortfall of GH¢405.34 million.
The outcome suggests that the government was unwilling to accept all the funds offered at the rates demanded by investors, choosing to limit its borrowing rather than risk higher interest costs.
Despite the shortfall, yields fell across all three instruments. The annualised interest rate on the 91-day bill declined slightly from 4.62% to 4.61%, while the 182-day bill fell from 6.31% to 6.29%. The 364-day bill recorded the biggest decline, dropping from 9.71% to 9.67%.
The government’s decision to reject a portion of the bids came as some investors sought rates as high as 7.10% for the 91-day bill, 8.15% for the 182-day bill and 11.51% for the one-year instrument. The highest rates allotted in full were 4.65%, 6.15% and 8.89%, respectively.
The latest results also showed a decline in investor participation compared with the previous auction on October 16, when total bids reached GH¢5.17 billion. This represents a drop of GH¢906.50 million, or 17.52%, in the value of bids received.
The amount accepted by the government fell by a smaller margin, from GH¢3.48 billion to GH¢3.39 billion, a decrease of GH¢89.73 million, or 2.58%.
Demand remained strongest for the 91-day bill, which attracted GH¢2.86 billion in bids. The Treasury accepted GH¢2.55 billion, accounting for 75.21% of the total funds raised at the auction.
The 182-day bill received GH¢533.28 million in bids, of which GH¢420.66 million was accepted. The 364-day bill attracted GH¢873.69 million, but the government accepted only GH¢420.24 million, rejecting more than half of the bids submitted for the instrument.
The figures highlight investors’ continued preference for short-term government securities, particularly the 91-day bill, which allows them to recover their funds relatively quickly.
While the preference for shorter maturities may reflect investors’ desire for flexibility, it presents a challenge for government debt management. Heavy reliance on short-term borrowing means the government must return to the market more frequently to refinance maturing obligations, exposing it to changes in interest rates and market liquidity.
Longer-term borrowing can help reduce refinancing pressure, but investors generally demand higher returns to commit their funds for extended periods. The gap between the 91-day and 364-day yields reflects this difference in borrowing costs.
For the government, lower yields could help contain interest payments on domestic debt. However, repeatedly accepting less than the targeted amount could create cash-management difficulties if revenue collections or other financing sources fall short of expectations.
The next auction will provide another indication of investor appetite and the government’s borrowing strategy. The Treasury has set a target of GH¢2.45 billion for tender 2031, representing a reduction of GH¢1.35 billion, or 35.57%, from the GH¢3.80 billion target at the October 23 auction.
The lower target could make it easier for the government to secure the funds it seeks, although the outcome will depend on the volume of bids received and the interest rates investors demand.
Overall, the October 23 auction showed that investors remain willing to lend to the government, but their participation is sensitive to the returns offered. Ghana raised GH¢3.39 billion at lower yields, yet fell short of its target as demand weakened from the previous week.
The results leave the government balancing two competing priorities: securing enough funds to meet its financing needs while keeping borrowing costs under control. Its ability to maintain that balance will depend on market liquidity, fiscal performance and investors’ willingness to commit funds beyond the shortest Treasury bill maturity.
