Government struggles to raise funds on domestic treasury market; T-Bills sale fall 66%

Government continues to struggle to raise funds from the domestic treasury market despite the increase in the Policy Rate by the Bank of Ghana to 17% and the announcement of fiscal measures by the Finance Minister to revive the economy.

This is because the weekly T-Bills sale fell by an immense 66.8%, indicating some tight liquidity on the market which one cannot tell when it will improve.

Out of the targeted amount of ¢2.21 billion, the government was able to secure ¢733 million from the auctioning by the Bank of Ghana.

Government however accepted ¢727.71 million of the sale of the short term securities.

Many market watchers, analysts and financial economist will see the results as a shock due to the expectations that the treasury market will respond positively to the increase in the Bank of Ghana’s base lending rate, same as the reaction of the foreign exchange market.

However, investors did not react as total amount purchased did not even meet half of the targeted amount of ¢2.210 billion.

Perhaps, the investors largely banks believe the increase in the yield of the short term securities did not correspond to the surge in the Policy Rate.

All the treasury instruments were sold below the Policy Rate of 17%.

A cursory look at the results showed that the investors who bought the T-bills rather went in for the 91-day and one-year bills because their interest rates were relatively better.

A little above ¢434 million was mobilized from the sale of the 91-day T-bills at an interest rate of 14.14%, while ¢222.37 million was secured from the auctioning of the one-year bill at a yield of 17.10%. ¢72.65 million were however mobilized from the sale of the 182-day T bills at an interest rate of 14.51%.

Before Friday, 25th March, 2022, the interest rates of the 91-day, 182-day and 1-year bills were going for 13.415%, 13.609% and 16.915%.

Despite the decline in the sale of the T-Bills, it is the hope that the situation will change when this week’s auctioning is held on Friday, 1st April 2022.

Treasury securities      Bids tendered    Bids accepted
91-day Treasury bill      ¢438.19m         ¢434.69m

182-day Treasury bill    ¢72.65m           ¢72.65m

One-year Treasury bill  ¢222.37m         ¢220.37m

Total ¢733 ¢727.71

Target : ¢2.210 billion