Treasury bill demand surges as bids hit GH¢11.64bn

Ghana's government witnessed a surge in investor appetite at its recent Treasury bill auction, attracting bids totaling GH¢11.64 billion, far surpassing the GH¢6.22 billion target. This robust demand highlights sustained investor confidence in short-term government securities.

The auction, detailed in figures from the Bank of Ghana's Tender 2019, saw substantial interest across various maturities. The 91-day bill attracted GH¢3.70 billion in bids, the 182-day bill garnered GH¢1.91 billion, and the 364-day bill proved exceptionally popular with GH¢6.02 billion in bids. Ultimately, the government accepted GH¢9.42 billion, comfortably exceeding its initial funding goals.

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this suggests the Treasury took advantage of favourable market conditions to raise more funds than initially planned.

Financial analyst Rockson Kemeh noted that the Treasury capitalized on favorable market conditions to raise more funds than planned. He also pointed to the yield structure, with the 364-day bill offering a compelling 12.99% interest rate, significantly higher than the 5.63% for the 91-day bill and 7.53% for the 182-day bill. This disparity reflects investors' preference for higher returns on longer commitments, balanced against the liquidity and lower risk of shorter-dated instruments.

The auction's outcome is a positive sign for government financing, enabling the Treasury to meet its short-term needs without driving up interest rates. This occurs even as short-term rates have generally declined from previous highs, demonstrating continued investor demand despite lower yields. The 364-day bill, in particular, remains a strong draw, offering returns close to 13%.

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The wide gap between the rates indicates that investors are willing to accept lower returns on shorter-term instruments, while demanding higher yields to commit funds for longer periods.