Investors tendered GH¢2.93 billion against a GH¢2.24 billion target, but government took only GH¢1.77 billion as short-term interest rates slid further.
Government's weekly borrowing from the domestic money market was oversubscribed again last week, with investors offering GH¢2.93 billion against a target of GH¢2.24 billion \u2014 about 30.5% above what the Treasury had asked for.
But the Treasury did not take all the money on the table. It accepted GH¢1.77 billion, which is below its own target, a sign that government did not need the full amount and was not prepared to pay more for it.
Treasury bills are short-term IOUs issued by government through the Bank of Ghana. Banks, firms and individual savers lend money for 91, 182 or 364 days and are paid back with interest. The auction is held every week and is one of the clearest live indicators of how cheaply government can borrow at home.
Where the money went
The 91-day bill, the shortest and most popular paper, attracted the bulk of the bids at GH¢2.215 billion. Of that, GH¢1.394 billion was accepted.
The 182-day bill drew GH¢235.19 million in bids, with GH¢153.59 million accepted. The 364-day bill received GH¢474.85 million, out of which GH¢224.35 million was taken.
In each case the Treasury left a sizeable share of the offers on the table \u2014 the clearest way for government to signal it will not chase investors with higher rates.
Rates still heading down
Yields continued their slide across the curve, as reported by Adom Online.
The 91-day rate eased by 4.0 basis points to 4.64%. The 182-day rate fell to 6.31% from 6.67% the previous week. The 364-day rate dropped by 3.0 basis points to 9.80%. A basis point is one-hundredth of a percentage point.
For savers, that means the return on parking money in government paper is now thin at the short end. A 91-day bill paying 4.64% is a far cry from the double-digit returns Ghanaian investors grew used to in recent years.
For government, the opposite is true: cheaper short-term borrowing eases pressure on interest costs in the budget.
What to watch next
Databank Research expects demand to stay relatively soft at the next auction, but says the Treasury's modest funding needs should keep the sale covered and yields broadly steady.
For Ghanaians abroad who send money home or hold cedi investments, the trend matters in two ways. Falling T-bill yields reduce the income from cedi-denominated fixed deposits and money market funds. They also tend to be read as a signal of easing inflation expectations and a calmer domestic debt market \u2014 though the direction of the cedi remains a separate question.
The next auction result will show whether the softening in demand is a short pause or a longer shift in appetite for government paper.
