Government exceeded its borrowing target in February 2024, raising GH¢24 billion through treasury bills. This figure represents a 29.3% increase over the initial borrowing target of GHS 18.5 billion, highlighting robust investor appetite for government debt instruments.
The surge in borrowing activity was propelled by an influx of investor bids totaling GH¢24.1 billion, marking an 8.8% month-on-month rise. Notably, accepted bids mirrored this upward trajectory, amounting to GH¢24.0 billion, an 8.9% increase over the previous month’s figures.
Cumulatively, the government surpassed its two-month borrowing target by GH¢12.4 billion, positioning it favorably to achieve its 2024 buffer goal of GH¢31.8 billion. Analysts report that the cumulative excess uptake during the initial two months of 2024 exceeds the corresponding period in 2023 by an impressive 23%, signaling heightened investor confidence in Ghana’s fiscal outlook.
Against the backdrop of this buoyant borrowing activity, yields experienced a notable decline in February 2024. Despite a marginal increase in January 2024 inflation, robust money market liquidity exerted downward pressure on yields. Specifically, the 91-day yield witnessed a substantial decrease of 131 basis points to 27.3%, while the 182-day and 364-day yields followed suit, falling by 135 and 150 basis points, respectively.
Analysts have identified a discernible tenor premium, with the 182-day bill emerging as the preferred option over its 364-day counterpart, despite inherent reinvestment risks. The spread between the 91-day and 182-day bills stands at 247 basis points, while that between the 182-day and 364-day bills registers at 55 basis points.
In summary, the government’s treasury bill issuance reflects burgeoning investor confidence and a favorable financing environment. As yields continue their downward trajectory amidst robust liquidity, market dynamics underscore the attractiveness of government debt securities.
Source:norvanreports