The Treasury market has recorded its first setback in nearly four months, as demand for government short-term securities weakened amid declining yield
The Treasury market has recorded its first setback in nearly four months, as demand for government short-term securities weakened amid declining yields and shifting investor preferences.
According to data from the Bank of Ghana, the latest Treasury bill auction fell short of its target by about GH¢139 million, marking the first undersubscription after 15 consecutive weeks of strong oversubscription.
Total bids across the 91-day, 182-day and 364-day instruments reached GH¢8.73 billion, but the government accepted GH¢7.9 billion, resulting in an undersubscription rate of approximately 7.45 percent.
The outcome signals a subtle shift in market dynamics, as the previously robust demand for Treasury bills begins to moderate.
The 91-day bill remained the most attractive instrument, recording bids of GH¢6.15 billion, with GH¢5.88 billion accepted, highlighting continued preference for shorter-term securities.
For the 182-day bill, investors submitted GH¢2.06 billion, out of which GH¢1.63 billion was accepted.
The 364-day bill, however, saw relatively weaker demand, with bids of GH¢529.46 million and GH¢480.46 million accepted.
Market analysts attribute the softer demand largely to declining yields, which are reducing the attractiveness of government securities.
The interest rate on the 91-day Treasury bill dropped by 11 basis points to 4.71 percent, down from 4.82 percent in the previous auction.
Similarly, the 182-day yield declined slightly by 2 basis points to 6.28 percent, while the 364-day bill saw a marginal increase of 6 basis points to 9.40 percent.
The general downward trend in short-term yields reflects improving macroeconomic conditions, including lower inflation and easing monetary policy, but it also means investors are earning less on government instruments.
Analysts say the undersubscription also points to a gradual tightening of liquidity conditions in the market, following a prolonged period of excess liquidity that had driven strong demand for Treasury bills.
At the same time, improving fundamentals in the equities market are beginning to attract investor interest, offering alternative opportunities for higher returns compared to short-term government securities.
This shift suggests a rebalancing of portfolios as investors respond to changing market conditions.
Despite the recent undersubscription, the Treasury market remains active, with the government setting a target of GH¢5 billion for the next auction.
The performance of that auction will be closely watched to determine whether the recent dip in demand is temporary or signals a broader shift in investor behaviour.sector and maximising the use of existing infrastructure.
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