Ghana’s Treasury Bills Auction Records Oversubscription Amidst Rising Interest Rates
The latest Treasury Bills auction by the Bank of Ghana saw an oversubscription by 40%, with investors submitting bids worth ¢2.567 billion, a significant increase from the targeted ¢1.834 billion. However, the government accepted 99.9% of the bids submitted, amounting to ¢2.56 billion, and largely from the banks.
The auction saw the 91-day T-bills receiving the majority of bids, with ¢1.62 billion submitted and all bids accepted. Similarly, almost all the bids submitted for the 182-day T-bills and the 364-day T-bills, worth ¢380.75 million each, were taken.
The increasing cost of borrowing from the Treasury market has become a concern to many analysts and market watchers. Currently, it remains the only source of borrowing for the government, and the treasury has had to increase the borrowed amount despite the high-interest rates.
For the most part, the rise in interest rates on the money market is alarming. The yield on the 91-day T-bill rose to 20.25%, up from 19.94%, while the 182-day bill inched up by 0.11% to 22.82%. The rate for the 364-day bill stood at 27.36%.
The table below shows a breakdown of the bids tendered and accepted for each security:
| Securities | Bids Tendered (GH¢) | Bids Accepted (GH¢) |
|---|---|---|
| 91 Day Bill | 1.629 billion | 1.629 billion |
| 182 Day Bill | 557.92 million | 557.90 million |
| 364 Day Bill | 380.75 million | 380.75 million |
| Total | 2.567 billion | 2.567 billion |
| Targeted | 1.834 billion | 1.834 billion |
In summary, the oversubscription of the Treasury Bills auction signifies investors’ willingness to lend to the government, but the rising interest rates could have a severe impact on the economy. It is essential to find alternative sources of borrowing to reduce reliance on the Treasury market and alleviate the burden of high-interest rates on the government’s finances.