The decrease in yields across the short-term spectrum of the market has come to an end, reversing the Treasury’s cost-cutting decision to retain yields on the low side at about 15% for the 91-day T-bill. This comes amid efforts by the Bank of Ghana to tighten liquidity (BoG).
The policy rate was raised by 150 basis points (bps) to 29.5 per cent at the Monetary Policy Committee (MPC) meeting of the BoG in March 2023, while the cash reserve requirement was raised to 14 per cent.
Treasury yields slightly increased last week to draw investors after demand dropped the week prior. This was the second week in a row that T-bill yields increased, following nine weeks in a row of strong auction performance and oversubscriptions that caused yields to decrease.
The 182-day bill jumped by 42bps to 21.86 per cent during last week’s auction, which was settled on April 3, 2023, while the 91-day bill increased by 50bps to 19.39 per cent. Investors effectively oversubscribed the offering by 21%, offering GH1.62 billion between the 91- and 182-day bills as opposed to the target size of GH1.34 billion. The Treasury accepted and allocated GHC 1.60 billion to cover a sum maturing face value of GHC 1.28 billion due this week, reflecting a 1.25x maturity cover.
Before the last auction that was settled on April 3, 2023, following the MPC’s decision, the market had signaled dissatisfaction with yields on the short-term bills.
This resulted in a downturn in the demand for T-bills after nine consecutive weeks of oversubscription, as Treasury recorded an under-subscription of GH¢2.44billion, 24 per cent short of the GH¢3.21billion issuance target.
