The government fell short of its latest Treasury-bill target after rejecting a significant portion of investor bids, particularly those demanding higher interest rates on the one-year security.
At the September 11 auction, government targeted GH¢7.97 billion from the sale of 91-day, 182-day and 364-day Treasury bills. Investors submitted bids worth GH¢8.20 billion, but the Treasury accepted only GH¢7.21 billion, leaving a shortfall of GH¢764.27 million.
The outcome means government raised about 9.59% less than its target despite receiving enough bids to fully cover the amount it intended to raise.
The strongest demand was recorded for the 91-day bill, which attracted GH¢4.56 billion in bids. Government accepted GH¢4.52 billion, representing about 99.12% of the amount offered.
The 182-day bill received GH¢2.07 billion in bids, of which GH¢1.82 billion was accepted, giving an acceptance rate of approximately 87.69%.
The biggest rejection occurred on the 364-day bill. Investors submitted GH¢1.56 billion, but only GH¢867.93 million was accepted, meaning GH¢695 million, or 44.47% of the bids, was rejected.
The rejection pattern points to a clear difference between what investors were willing to lend at and what the Treasury was prepared to pay, particularly for longer-term funding.
Rates submitted for the 364-day bill ranged from 8.6758% to 11.1111%, while bids allotted in full were limited to rates between 8.6758% and 10.1124%. This suggests the Treasury was unwilling to accommodate a significant portion of bids carrying rates above its preferred range.
The same trend was evident, although less sharply, in the shorter maturities. Rates for the 91-day bill ranged from 4.4000% to 5.5227%, with fully allotted bids capped at 5.0000%. For the 182-day bill, submitted rates ranged from 6.1500% to 8.6124%, while fully allotted bids ranged from 6.1500% to 7.0000%.
Weighted average interest rates for the week of September 14 to 18 stood at 4.6949% for the 91-day bill, 6.5107% for the 182-day bill and 10.1017% for the 364-day bill.
This puts the difference between the 91-day and 364-day rates at about 541 basis points, showing the significantly higher return investors are demanding to commit their funds for a year.
For government, the pricing gap presents a difficult financing choice. Short-term Treasury bills offer cheaper funding but have to be refinanced more frequently, exposing the Treasury to greater rollover pressure. Longer-term bills, on the other hand, provide more breathing room but come at a substantially higher interest cost.
Investor demand also weakened compared with the previous auction. On September 4, investors submitted GH¢9.94 billion in bids, with GH¢8.38 billion accepted. The latest auction therefore recorded a 17.53% decline in total bids and a 14.03% drop in the amount accepted.
Still, the latest results show that demand has not disappeared. Investors provided enough bids to meet government’s target, but the Treasury chose not to accept all the available funding, especially where the cost was considered too high.
The coming auctions could therefore offer a clearer indication of whether investors will continue demanding double-digit returns on one-year Treasury bills and whether government will maintain its resistance to those higher rates.
For now, the latest auction suggests that liquidity remains available, but investors are placing a higher price on longer-term lending, while the Treasury is increasingly cautious about locking in expensive funding.
