Sierra Leone’s government has successfully placed longer-dated domestic debt, with investors fully subscribing to a 364-day Treasury bill at the first auction of 2026, signalling growing appetite for extended maturities despite elevated borrowing costs.
At the auction held on January 1, demand for the one-year bill matched the offer of 45.6 million new leones, with the full amount allotted at a clearing discount rate of 85.30 percent, equivalent to an annual yield of 16.95 percent, according to official results.
Bids ranged from a high discount of 85.60 percent to the accepted low, averaging 85.54 percent, indicating stable pricing and firm demand.
The outcome contrasts with recent auctions of shorter-dated Treasury bills, which have often been undersubscribed, forcing authorities to scale back allocations. The successful placement suggests investors are increasingly willing to commit funds for longer periods as the government shifts away from heavy reliance on 91-day and 182-day instruments.
The move aligns with the Bank of Sierra Leone’s strategy to improve liquidity management and reduce refinancing pressures by smoothing the government’s domestic debt profile.
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That approach will be tested at the next auction scheduled for January 8, when authorities plan to issue 324 million new leones in one-year bills maturing on January 7, 2027—more than seven times the size of the most recent sale. The auction committee retains the option to adjust the amount by up to 10 percent.
Bids for the upcoming auction are due through banks and discount houses, with a minimum bid size of 500 leones, in multiples of 50 leones.
For the Treasury, extending maturities helps reduce rollover risk in a high-yield environment and eases short-term cash-flow pressures, potentially creating fiscal space as inflation shows signs of moderating.
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Market analysts caution, however, that the sharp increase in issuance could test investor capacity and absorb bank liquidity, potentially crowding out private sector lending if financial institutions prefer government securities.
The full subscription of the latest auction has helped reinforce confidence in government policy and provided support for the leone, though yields near 17 percent underscore the continued high cost of domestic borrowing.
Unless revenues improve particularly from mining and exports elevated interest costs are likely to remain a strain on the budget, analysts say.
By lengthening its debt profile, the government is seeking to balance deficit financing with greater stability in the domestic market, moving away from the short-term funding pressures that have characterised previous borrowing cycles.
