Ghana’s 364-day Treasury bill yield climbed to its highest level in more than five months at Monday’s auction, as the government sold more short-term debt than planned to absorb excess liquidity from the financial system.
The 364-day bill cleared at a weighted average yield of 12.82 percent, its highest level since Jan. 16, according to auction results.
The government issued GH¢5.7 billion (about US$540 million) in Treasury bills, exceeding its target of GH¢4.6 billion (about U$436 million), while refinancing maturities worth GH¢3.0 billion (about US$284 million), resulting in a net increase in domestic borrowing.
Investor demand remained strong, with bids totalling GH¢7.4 billion (about US$701 million). The 364-day instrument attracted the bulk of demand, accounting for GH¢5.4 billion (about US$512 million), or about 74% of total bids, indicating investors’ preference for locking in higher yields over longer short-term maturities.
The auction reflects continued upward repricing along Ghana’s Treasury bill yield curve, driven by increased government borrowing and expectations of higher inflation and interest rates.
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Market analysts said investors had shifted away from lower-yielding liquidity management instruments issued by the Bank of Ghana in favour of higher-yielding government Treasury bills.
Bank of Ghana open market operations recorded a liquidity shortfall of GH¢6.4 billion (about US$607 million) relative to maturities during the week, with much of that liquidity redirected into government debt issuance, according to market commentary.
Investors also demanded higher yields, raising bid levels by about 211 basis points compared with previous auctions, reflecting increased inflation expectations and a higher term premium.
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The government, however, limited its borrowing costs by widening the range of accepted bids by only 26 basis points while still meeting its funding objectives.
Cumulative Treasury bill issuance has now reached GH¢171 billion (about US$16.2 billion) this year against maturities of GH¢143 billion (about US$13.6 billion), resulting in a net expansion of GH¢28 billion (about US$2.7 billion) in Ghana’s domestic debt stock.
The government plans to raise GH¢3.3 billion (US$313 million) at its next Treasury bill auction, matching the value of maturing securities, signalling a broadly neutral issuance strategy.
Analysts expect investor demand for Treasury bills to remain firm as the yield gap between Bank of Ghana open market instruments and government securities continues to encourage investors to seek higher returns in the short-term debt m
