The Government of Ghana has exceeded its treasury bills auction target for the second consecutive week since the start of the year, reflecting robust investor interest in government securities despite rising interest rates.
The latest auction (Tender 1938), conducted on January 17, 2025, recorded total bids of GHC 8.89 billion against a target of GHC 6.35 billion, with GHC 8.84 billion accepted. This performance follows a similar trend in the previous week (Tender 1937), where the government also surpassed its target of GHC 5.20 billion, receiving GHC 8.08 billion in bids.
In Tender 1938, The 91-day treasury bill remained the most sought-after security, receiving GHC 5.69 billion in bids, with GHC 5.65 billion accepted. The 182-day bill attracted GHC 1.32 billion in bids, with GHC 1.31 billion accepted, while the 364-day bill saw bids of GHC 1.88 billion, all of which were accepted.
Interest rates however continued their upward trajectory, driven by inflationary pressures and higher borrowing costs. The weighted average interest rates for the 91-day, 182-day, and 364-day bills were 28.42%, 28.97%, and 30.29%, respectively, up marginally from the previous week’s rates of 28.34%, 28.96%, and 30.18%.
Although the government’s ability to consistently surpass its targets could be signals of a strong demand for its securities, the rising rates present challenges for fiscal sustainability as the cost of borrowing continues to increase.
Government for the next auction (Tender 1939) has inched down the target to GHC 6.01 billion.
Despite signs of a strong market, focus will remain keen as to whether interest rates will stabilize or continue their upward trajectory.
This development serves as a crucial indicator of both investor sentiment and the government’s borrowing strategy, with implications for fiscal policy and broader economic management as Ghana’s parliament is expected to approve its new finance minister this week.
Ceditalk.com
