Investors have increasingly turned to Bank of Ghana bills, offering returns of about 28%, instead of traditional treasury bills, amid a sharp decline in yields. This shift comes as the government has experienced undersubscription in recent T-bills auctions.
“We expect the 100 basis points hike in the policy rate to sustain interest in Open Market Operations (OMOs) securities, draining demand for T-bills and stabilizing yields. However, the ongoing squeeze on public spending is expected to ease financing needs, preventing an upward spike in T-bill rates, barring any FX shocks,” noted IC Insights.
In the most recent auction, the government rejected GH¢2.37 billion in bids exceeding its yield corridor and accepted only GH¢1.69 billion out of a targeted GH¢4.39 billion. This partial uptake covered just 40% of the upcoming maturities worth GH¢4.22 billion, reflecting tighter supply conditions.
As a result, yields declined by 6.0 basis points on the 91-day bills, 23 basis points on the 182-day bills, and 1.0 basis point on the 364-day bills, settling at 15.65%, 16.50%, and 18.84%, respectively.
The significant bid rejections highlight a misalignment between investor yield expectations and the government’s yield objectives, particularly as the government plans to reopen the bond market.
Databank Research noted, “The gap between the Monetary Policy Rate and money market yields signals a policy rate disconnect—a short-term divergence intended to steer investor interest toward limited alternative assets. However, continued rejections could gradually deplete the Treasury’s liquidity buffers, tightening liquidity in the money market.”
The government plans to raise GH¢6.68 billion this week through the issuance of 91-day, 182-day, and 364-day bills to cover GH¢6.43 billion in maturing bills.