The Ghana Treasury bill auction closed with GH¢10.51 billion in investor bids, overshooting the government’s GH¢5.87 billion target by 79.08 percent and handing the Treasury room to borrow far more than planned.
Results of Tender 2018, held on July 31 and published by the Bank of Ghana, show that the government accepted GH¢8.65 billion, equivalent to 82.35 percent of all bids.
The amount taken was GH¢2.79 billion above target, a 47.48 percent increase on the stated financing requirement. The numbers tell their own story. Cash was available, demand was deep and the Treasury chose to use it.
One year bill captures bulk of demand
Investors submitted GH¢2.27 billion for the 91 day bill and GH¢757.93 million for the 182 day instrument. The one year bill attracted GH¢7.47 billion, making it the clear centre of the auction.
Government accepted GH¢972.94 million from bids for the 91 day security and GH¢501.38 million for the 182 day bill. Its approach to the longer instrument was different.
Of the GH¢7.47 billion offered for the 364 day bill, GH¢7.18 billion was accepted, giving that tenor an acceptance rate of about 96.03 percent.
The 364 day bill alone accounted for 71.15 percent of total bids and roughly 82.96 percent of all funds raised. That concentration suggests the government preferred to lock in more funding for one year instead of absorbing every cedi available at the shortest end of the market.
Yields remained contained despite the heavy subscription. The weighted average interest rate on the 91 day bill settled at 5.76 percent, while the 182 day bill cleared at 7.64 percent. The 364 day yield was 12.98 percent.
Compared with the previous auction, the 91 day yield fell by two basis points and the 182 day rate dropped by four basis points.
The one year rate increased by only two basis points from 12.96 percent.It raised nearly half more than its target without triggering a sharp repricing across the curve.
Strong demand extends into another week
The latest result follows another large auction on July 24. Tender 2017 attracted GH¢12.37 billion in bids, with the government accepting GH¢11.55 billion against a GH¢9.49 billion target.
Two strong auctions in succession point to ample liquidity and demand for government paper. They do not, on their own, prove a broad return of investor confidence. Portfolio requirements, available liquidity and the yield premium on the one year bill may all be influencing demand.
The Bank of Ghana has set a GH¢6.22 billion target for Tender 2019 across the same three maturities. Continued oversubscription gives the government flexibility to meet cash and refinancing needs.
There is a cost, however. Accepting substantially more than announced increases domestic financing and creates future interest and repayment obligations.
Taking more of the 364 day bids reduces immediate rollover pressure compared with relying heavily on 91 day paper, but the debt still matures within a year.
The next auction will show whether the appetite holds. For now, the message from July 31 is plain: investors offered much more than the government requested, and the Treasury took advantage of it.
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