T-Bills sale oversubscribed by 14%, as interest cost falls marginally

Sale of Treasury bills, an important instrument that aids government domestic borrowing shot up marginally by 14.8%.

This is a turnaround from the recent mixed developments in the auction of the short term instruments.

According to auctioning by the Bank of Ghana, the government secured GH¢1.34 billion as against a target of GH¢1.17 billion.

However, majority of the sale came from the 91-day T-bills which the investors, largely banks bought for GH¢664 million.

Treasury bills is an important financial instrument that helps government to finance the national debt, therefore the recent slump in the targets were major concerns because it could have thrown government’s debt management programme out of gear.
The interest rate, particularly the 91-day T-bills, which the investors largely subscribed to fell albeit marginally to 12.63%.

However, no matter how small it is, it will save the government some interest cost on the domestic debt.

The cut in the policy rate of the Bank of Ghana by 1% is likely to sustain the downward pressure on treasury yields in the short-term to help government lower its cost of funding, which is needed to help the authorities manage the country’s huge debt service burden and a difficult fiscal position.

Securities Bids Tendered (GH¢) Bids Accepted (GH¢) Interest rate
91 Day Bill 664.10 million 664.10 million 12.63%
182 Day Bill 141.63 million 136.63 million 13.42%
364 Day Bill 539.67 million 539.67 million 16.33%

Total 1.345.4 billion 1.340.4 billion
Target 1.171 billion