This shift is being driven by a sharp decline in Treasury bill yields, resulting in a notable under-subscription in the government’s recent auction.
According to IC Insights, the 100-basis-point increase in the policy rate is expected to sustain demand for Open Market Operations (OMO) securities, further dampening interest in Treasury bills.
“However, the ongoing squeeze on public spending will ease the financing requirement and avert an upward reversal in T-bill rates, barring any foreign exchange shocks,” the report noted.
In the last auction, the government rejected GH¢2.37 billion worth of bids that exceeded its yield corridor, accepting only GH¢1.69 billion out of a targeted GH¢4.39 billion.
This partial uptake covered just 40% of the GH¢4.22 billion in maturing bills, highlighting tightening liquidity in the market.
As a result, Treasury bill yields declined week-on-week by 6 basis points, 23 basis points, and 1 basis point for the 91-day, 182-day, and 364-day tenors, settling at 15.65%, 16.50%, and 18.84%, respectively.
The significant bid rejections underscore a misalignment between investor yield expectations and the government’s yield targets, particularly as plans to reopen the bond market gain traction.
Looking ahead, the government aims to raise GH¢6.68 billion this week through the issuance of 91-day, 182-day, and 364-day bills to refinance GH¢6.43 billion in maturing obligations.
Source: www.ghanaweb.com
