Treasury Bill auction faces 22% shortfall as yields continue to decline

Last week’s Treasury bill auction ended in an undersubscription, with total demand falling 22.12% short of target.

The result breaks a streak of three consecutive oversubscriptions and follows a sharp drop in the interest rate offered on the 56-day Bank of Ghana (BoG) bill.

According to the latest BoG data, the government sought to raise GHS 8.58 billion but secured GHS 6.69 billion. Out of GHS 5.02 billion in bids for the 91-day bill, GHS 4.99 billion was accepted.

For the 182-day bill, GHS 1.23 billion was taken from GHS 1.37 billion in bids, while the 364-day bill recorded GHS 452 million in accepted bids from a total of GHS 490 million.

Analysts say the undersubscription reflects the government’s continued rejection of high-yield bids, alongside increased liquidity flows into the BoG’s Monday and Wednesday auctions, which mobilised about GHS 6.2 billion ahead of Friday’s sale.

Yields on short-term securities continued to edge down, ranging between 10% and 13%. The 91-day bill yield fell by 9 basis points to 10.20%, the 182-day by 10 basis points to 12.25%, and the 364-day by 14 basis points to 13.10%.

The government is targeting GHS 4.24 billion at the next auction.