T-Bills Undersubscription: Gov’t Continues to Miss Auction Targets; Raises GHS 5.2 Billion in Latest Auction

The Government’s struggle to meet its Treasury Bill auction targets has persisted for the sixth week in a row, as the latest auction raised GHS 5.22 billion, narrowly missing the GHS 5.31 billion target by GHS 91 million.

This ongoing shortfall highlights growing concerns about the government’s ability to secure adequate funding through short-term debt securities.

Investor sentiment was most robust for the 91-day Treasury Bill, which garnered bids totaling GHS 3.72 billion.

The 182-day bill attracted GHS 1.25 billion, while the 364-day bill saw bids amounting to GHS 252 million.

Despite the high interest, the undersubscription signals underlying challenges in the government’s efforts to meet its funding needs.

Yields on the T-Bills experienced minor adjustments across board, with the 91-day bill inching up by 0.06% to 24.78%.

The 182-day bill also saw a modest increase of 0.06%, settling at 26.68%, while the 364-day bill declined slightly by 0.04% to 27.81%.

These fluctuations reflect the delicate balancing act the government faces in maintaining investor appeal while addressing its liquidity constraints.

Looking forward, the government plans to raise GHS 5.08 billion in its upcoming Treasury Bill auction, with a continued focus on the 91-day, 182-day, and 364-day bills to align with market demand.

However, the persistent liquidity challenges that have contributed to recent undersubscriptions remain a key concern.

In the broader fiscal strategy, the government has outlined an ambitious plan to raise GHS 78.44 billion from the domestic money market during the third quarter of 2024.

Of this total, GHS 53.80 billion will be allocated for rolling over maturing short-term securities, while GHS 24.63 billion is earmarked for fresh issuances aimed at addressing the government’s financing needs.

The success of this plan will be crucial in determining the government’s ability to navigate its current economic challenges.

Source:norvanreports.com