Ghana’s latest Ghana T Bill auction has sent a strong signal to the domestic debt market, with government accepting just GH¢4.88 billion out of GH¢11.28 billion in bids submitted by investors.
The amount accepted was about 18.55% below the GH¢5.99 billion target, despite investor demand exceeding the government’s requirement by 88.22%.
The outcome points to a more selective borrowing approach, with authorities appearing unwilling to pay rates outside their preferred range.
364 day bill takes the biggest hit
The rejection was most pronounced on the 364 day Treasury bill.
Investors submitted GH¢4.93 billion for the one year instrument, but government accepted only GH¢289.70 million, representing just 5.87% of the bids received.
The 91 day bill attracted GH¢5.07 billion, of which GH¢4.07 billion was accepted. The 182 day bill received GH¢1.28 billion in bids, with government taking GH¢526.44 million.
As a result, the 91 day instrument accounted for 83.28% of total securities sold, while the 182 day and 364 day bills contributed 10.78% and 5.93%, respectively.
The allocation shows where government currently prefers to borrow, even as investors continue to show appetite for longer dated securities.
Government draws a line on yields
Pricing appears to have been central to the heavy rejection.
For the 91 day bill, investors submitted bids carrying discount rates between 5.09% and 7.00%. Government fully allotted bids only up to 5.45%, producing a weighted average discount rate of 5.39% and an equivalent interest rate of 5.47%.
The six month bill attracted bids between 6.90% and 8.63%, but bids were fully allotted only up to a discount rate of 7.1360%. Its weighted average interest rate settled at 7.27%.
The position was even firmer on the 364 day bill. Investors sought rates between 11.11% and 12.50%, yet government fully accepted only bids at the 11.11% discount rate. The resulting weighted average interest rate was 12.50%.
In effect, strong demand did not give investors a free hand on pricing.
Borrowing falls sharply
The latest auction also marked a significant reduction in government’s actual borrowing.
At the previous tender on August 7, investors submitted GH¢11.64 billion and government accepted GH¢9.42 billion. Accepted borrowing therefore fell by about 48.17% in the latest auction, even though total bids declined by only 3.07%.
That difference is telling.
Investor liquidity remains available, but government appears increasingly prepared to reject expensive money rather than accept every bid placed at the auction.
For debt managers, the approach could help contain interest costs where sufficient cash buffers or alternative funding options are available. But there is another side to it. Heavy reliance on short term securities means more frequent refinancing as three month bills mature.
The next auction will target GH¢5.43 billion across the three Treasury bill maturities.
Its outcome will offer another clue as to whether the August 14 result was simply a tactical decision or part of a broader attempt to push domestic borrowing costs lower.
For now, the message from the Treasury is straightforward: GH¢11.28 billion in investor demand does not mean Ghana will borrow at any price.
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