The latest Ghana Treasury bill auction raised GH¢11.55 billion, beating the government’s financing target by GH¢2.05 billion as investors directed most of their funds into the one year security.
Auction results published by the Bank of Ghana showed that investors submitted total bids of GH¢12.37 billion. The government accepted 93.32 per cent of that amount, rejecting roughly GH¢826.34 million.
The amount raised was 21.63 per cent above the GH¢9.49 billion target set for the sale of the 91 day, 182 day and 364 day bills.It was another strong auction. Not quite an even one.
One Year Bill Dominates Demand
The 364 day Treasury bill attracted GH¢8.11 billion in bids, far more than the other two instruments combined. Government accepted GH¢7.82 billion, meaning the one year bill accounted for 67.75 per cent of the total funds raised.
Investors submitted GH¢2.95 billion for the 91 day bill, with GH¢2.60 billion accepted. The 182 day security received GH¢1.31 billion in bids, of which GH¢1.12 billion was allotted.
The heavy preference for the one year bill suggests investors were willing to lock away funds for longer in exchange for a higher return.
Weighted average interest rates stood at 5.79 per cent for the three month security, 7.69 per cent for the six month bill and 12.97 per cent for the one year instrument. That left the 364 day yield 7.18 percentage points above the return on the 91 day bill.
Government Rejects Higher Priced Bids
The Bank of Ghana’s data also showed that authorities remained selective about the rates accepted.
Bids for the 91 day security ranged from 5.56 per cent to 7.85 per cent, but the accepted range stopped at 5.78 per cent.
For the 182 day bill, investors offered between 7.23 per cent and 9.10 per cent, while successful bids ranged from 7.23 per cent to 7.50 per cent.
The accepted discount rate for the one year bill did not exceed 11.50 per cent, despite bids reaching 12 per cent.
Government rejected GH¢350 million in bids for the 91 day instrument, GH¢185.89 million for the six month bill and GH¢290.45 million for the 364 day security.
Auction Sales Rise Despite Lower Bids
The GH¢11.55 billion raised was 15.70 per cent higher than the GH¢9.98 billion accepted at the previous auction on July 17.Total bids, however, fell by 2.59 per cent from the previous week’s GH¢12.70 billion.
The higher acceptance may reflect immediate refinancing and cash management needs. Treasury bill proceeds are commonly used to settle maturing securities as well as finance short term government obligations.
The published results did not disclose how much debt matured during the week. It is therefore unclear whether the auction produced net new borrowing or mainly refinanced existing obligations.
Next Auction Target Cut Sharply
Government has lowered the target for the next auction to GH¢5.87 billion, representing a 38.20 per cent reduction from the latest target.
That figure is also nearly half the amount raised this week. The smaller target may reduce immediate pressure on domestic borrowing. Actual sales will still depend on market liquidity, investor expectations and the volume of Treasury bills falling due.
For now, demand remains strong. Investors are simply asking for more return when government wants their money for longer.
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