T-Bills undersubscribed for third straight week despite rate hike

Government efforts to lure investors into Treasury Bills by raising interest rates failed to yield the desired response, as last week’s auction once again missed its target. It marked the third consecutive week of undersubscription.

According to the Bank of Ghana’s auction results, government sought to raise GH¢6.4 billion, but total bids submitted amounted to GH¢5.8 billion, leaving a shortfall of GH¢608.87 million. This represented a 9.5 percent undersubscription.

The breakdown showed that the 91-day bill attracted GH¢4.05 billion in bids, the 182-day bill recorded GH¢1.34 billion, while the 364-day bill accounted for GH¢430 million. Out of the GH¢5.8 billion submitted, government accepted GH¢5.7 billion, rejecting only GH¢62 million.

This marks a continuing trend of weak demand. In the two preceding weeks, T-bill auctions fell short by GH¢1.7 billion and GH¢1.2 billion respectively, raising concerns about investor appetite.

On interest rates, the government adjusted yields upward in a bid to rekindle demand. The 91-day bill rose from 10.1374% to 10.4197%, while the 182-day bill increased from 12.2302% to 12.3861%. The 364-day bill, however, saw a marginal decline from 13.0865% to 13.0043%.

Analysts note that the rate hikes, while offering temporary relief, also undercut government’s broader agenda of gradually pushing T-bill rates into single digits. “The latest auction suggests investor confidence remains cautious despite higher yields,” one market observer remarked.

Looking ahead, government has set a more ambitious target of GH¢6.7 billion for this week’s auction. The market will be closely watched to determine whether demand rebounds or the current streak of undersubscription continues.