Government in the issuance of its 91,182 and 364 days treasury bills missed its target of raising GHS 1.96bn.
Government in the auction of the short-term securities missed its target by some GHS 714m as it managed to raise GHS 1.24bn from the debt market.
Bids for the 91, 182 and 364 days T-Bills amounted to GHS 1,031 million, GHS 128 million and GHS 88 million respectively with government accepting all bids made for the 91, 182 and 364 days T-Bills.
The 91, 182 and 364 days T-Bills were auctioned at interest rates of 18%, 19% and 21% respectively.
Government’s inability to achieve its set targets for T-Bills auction can mainly be attributed to the disinterest of investors in the short term instruments given the high rate of inflation which currently stands at 23.6%.
With the outlook of inflation projected to remain negative and continue the upward trend, investors disinterest in the short-term debt instruments will continue.
Investors will “ignore” government’s treasury bills in search of other investment instruments with higher interest rate returns.
This them implies that government will continue to face lower and lower subscription to its treasury bills.
Government can however, correct the current trend of low T-bills subscription by offering interest rates above inflation on its short term securities.
With that said, the upcoming MPC meeting by the Central Bank in which the apex bank is expected to hike the policy rate offers some hope to government in reverting the current trend of low T-bills subscription.
Government, in its next auction – May 20– is aiming at raising some GHS 875 million from the issuance of the 91 and 182 day bills.
Source norvanreports
