T-bills auction: Government records 15.3% oversubscription

The Government of Ghana’s T-bill offer across 91-day to 364-day bills was oversubscribed by approximately 15.3% relative to the target size of GHS 3.065 million at last week’s auction.

The offer attracted total bids estimated at GHS3.54 billion, with the Treasury accepting 99.21% of the bids valued at GHS3.51 billion.

According to figures from the Bank of Ghana, a chunk of the bids came in from the 91-Day bill.

The investors tendered GHS 2.53 billion for the 3-month financial instrument.

According to the result of the Bank of Ghana, the aggregate bids from investors amounted to GHS3.54 billion against the government’s target issuance size of GHs 3.07 billion, resulting in 15.3 percent oversubscription.

The 91-day attracted the most demand, recording total bids worth GHS 2.53 billion, with the government accepting 99.96% of the amount tendered for this three-month instrument.

The government also received and accepted total bids worth GHS 261.69 million from investors for the 182–day bill.

However, for the 364-day bill, the government accepted GHS 721.03 (96.4%) out of the GHS 741.81 million worth of bids received for this 1-year tenor.

In all, the total amount sold at this auction exceeded the auction target by 14%, and the T-bill refinancing obligation due today, August 14, 2022, by 22%.

Despite the oversubscription, interest rates continued higher on the money market.

The 91-day T-bill increased by 52bps w/w to 26.09% (from 25.57% last at the preceding auction), with the 182-day and the 364-day T-bills also increasing by 32bps w/w and 21bps w/w, to 27.28% and 30.49%, respectively, at the auction.

Later this week, the government will seek to raise GHS3.97 billion from the 91, 182, and 364-day bills at the next auction.

This target exceeds the T-bill maturity obligation for the week by 61.8% as the government may be seeking to raise new money to finance its programmes and projects.

With yields already ascending and inflation still a major concern; the significantly higher target size at the next auction could nudge the clearing yields even higher.

 

Source: Citi Business News