With inflation moderating to 13.7 percent in June and the government eyeing longer-dated bond issuance, analysts anticipate further undersubscription and a continued decline in T-bill rates in the coming weeks.
Despite increasing its offer, the Treasury raised GH¢2.96 billion from the latest auction, falling short of its GH¢3.36 billion target. Still, the proceeds were enough to cover the GH¢2.24 billion in maturing bills, with investors taking up 88 percent of the target and 132 percent of the amount due for rollover.
Yields continued to drift lower across the curve. The 91-day bill dropped 13 basis points (bps) week-on-week (W/W) to 14.57 percent, the 182-day bill declined 23bps to 15.02 percent, and the 364-day bill shed 49bps to settle at 15.17 percent. This marked the third consecutive week of declines, in line with market expectations of lower inflation and a shift in investor preference toward instruments offering better returns.
“Investors appear to be reallocating toward other competitive yield securities, especially in the bond market where sentiment has picked up,” Databank said in its note to investors.
“We expect the trend of undersubscription in T-bills to persist, particularly as the Treasury prepares to return to the local bond market,” it continued.
The Ministry of Finance is targeting GH¢7.53 billion from this week’s T-bill auction, scheduled for Friday, July 11, to refinance GH¢7.26 billion in maturing bills. However, market watchers remain uncertain whether demand will improve, especially with the government reportedly preparing to issue longer-term bonds as part of a broader debt management strategy.
Analysts suggest the Treasury’s timing aligns with an attempt to lock in relatively low yields for longer maturities, ahead of expected refinancing needs.
“There is a clear strategy at play here: lock in financing at cost-effective levels while inflation expectations are anchored,” Databank stated.
Meanwhile, activity in the secondary bond market showed signs of recovery after a prior slowdown. Total traded volume rose 3.88 percent W/W to GH¢1.21 billion as investors sought opportunities in longer-dated bonds. The February 2027 bond, with a coupon of 8.35 percent, led activity and accounted for 40 percent of total trades at a weighted average yield of 19.54 percent.
Trades in the 2027–2030 segment comprised 49 percent of activity and cleared at an average yield of 19.94 percent, while bonds maturing between 2031 and 2038 represented 51 percent of the market, with a weighted average yield of 19.62 percent.
Improved market sentiment was supported by the recent approval of a US$300 million World Bank Development Policy Operation and the government’s successful servicing of its second post-restructuring Eurobond coupon of US$349.52 million. The combination of multilateral inflows and external debt service performance has helped boost investor confidence in the domestic debt markets.
“There is renewed appetite for duration, particularly among institutional investors who see stability in the macro backdrop. The IMF’s expected disbursement of US$370 million will likely provide further support,” analysts at Databank said.
Although trading in older bonds remains limited, the rebound in the first half of 2025 has been notable. Bond market volumes surged to GH¢24.01 billion from GH¢19.35 billion over the same period in 2024, pointing to a recovery in market confidence following the Domestic Debt Exchange Programme (DDEP).
The August 2027 bond (10 percent coupon) stood out as the most actively traded security in the first half, representing 16 percent of overall volume and pricing at an average rate of 20.62 percent.
Source: thebftonline.com
