Gov’t misses T-Bill target for the first time after months of oversubscription

The Government, for the first time in over three (3) months of persistent oversubscription of its T-Bills missed its target of mobilizing some GHS 2.8bn via the short-term debt instruments.

The last time the Government’s Treasury Bill was undersubscribed was on December 4, 2023.

For the past 13 weeks, the short-term debt instruments had been oversubscribed by primary dealers notwithstanding the consecutive decline in yields on the T-Bills.

The Treasury, per the post-auction results made available by the Central Bank, raised some GHS 2.56bn, a shortfall of GHS 248m from the target of GHS 2.8bn.

Total bids of GHS 2.02bn, GHS 417m, and GHS 120m were made on the 91, 182, and 364-day T-Bills with the Government accepting all bids tendered for the securities.

Yields at which bids were made for the 91, 182, and 364-day stood at 25.73%, 28.22% and 28.83% respectively.

When compared to the yields recorded the previous week, there is a week-on-week marginal decline in yields by some 0.1%, 0.2%, and 0.1% respectively.

Per a market analysis by norvanreports, the under-subscription of the T-Bills by primary dealers (most of whom are banks) could be due to the rush by banks to comply with the new Capital Reserve Ratio (CRR) directive by the Central Bank as banks divert a portion of their excess liquidity which hitherto they would have invested in T-Bills into meeting the new requirement.

According to the Central Bank, effective April this year, banks will be mandated to adhere to the following cash reserve ratios based on their respective loan-to-deposit ratios:

• Banks with a loan-to-deposit ratio exceeding 55% will be subjected to a currency Cash Reserve Ratio of 15%.
• For banks maintaining loan-to-deposit ratios ranging between 40% and 55%, a Cash Reserve Ratio of 20% will be enforced.
• Banks with loan-to-deposit ratios falling below 40% will face a more stringent requirement, with a Cash Reserve Ratio set at 25%.

Looking ahead, the Government coming this Friday will once again try to raise some GHS 3.45bn via the 91, 182, and 364-day Treasury Bills on the domestic debt market.

• Meanwhile, the Government borrowed a total of GH¢19.90 billion through treasury bills in March 2024, marking a 17% decline from the previous month’s borrowing of GH¢23.94 billion.

The funds raised were used to refinance maturities worth GH¢14.47 billion.

Source:norvanreports