Ghana's government raised GHS120.2 billion from the Treasury bill market between January and April 2026. Investors submitted GHS181.5 billion in bids, but the government accepted a lower amount. This indicates a cautious borrowing strategy by the Treasury.
Investor demand for Treasury bills weakened significantly from late March through April. This followed sharp declines in the yields, which are the returns investors get. The Bank of Ghana data shows that the market had strong demand earlier in the year but shifted as yields fell.
This situation reflects the government's effort to balance its financing needs with controlling borrowing costs. Ghana has been managing its public debt and seeking to reduce interest expenses. The changing market conditions, particularly declining yields, influenced investor behaviour and the government’s acceptance of bids.
Data from the Bank of Ghana revealed two distinct market phases. From January to mid-March, investor demand was strong, leading to 11 consecutive oversubscribed auctions. Demand peaked in mid-February, with bids of GHS22.67 billion against a target of GHS6.42 billion. However, from late March, demand softened, leading to six consecutive undersubscribed auctions.
The sharp fall in yields played a major role in this shift in investor behaviour. At the beginning of the year, the 91-day bill offered an average yield of 11.12%. The 364-day bill yielded 12.93% in January. By the end of April, the 91-day bill yield dropped to 4.92%, and the 364-day bill eased to 10.20%. These lower returns made Treasury bills less attractive to investors.
Investor appetite also shifted across the maturity curve as yields dropped. Earlier in the year, longer-term instruments, like the 364-day bill, attracted stronger interest, with GHS15.18 billion in bids in January. By the end of April, bids for the 364-day bill fell sharply to approximately GHS3.12 billion. Investors became less willing to commit funds for longer periods at lower returns.
In the final auction of April, demand concentrated mainly on the 91-day bill, attracting GHS2.8 billion in bids, with GHS2.7 billion accepted. The 182-day bill received GHS717.6 million in bids, and GHS664.4 million was accepted. The 364-day bill attracted GHS960.1 million in bids, but only GHS522.5 million was accepted, indicating lower government acceptance amid declining yields.
The government appears to have capitalized on strong market liquidity in the first quarter to secure borrowing at higher rates. As yields declined and investor demand softened, the Treasury adopted a more disciplined issuance strategy. This included often accepting fewer bids than the total amount investors submitted. Large bid rejections in April indicate a deliberate strategy to manage borrowing costs, prioritizing lower interest expenses over fully meeting auction targets.
This careful approach demonstrates the government's ongoing attempt to balance its borrowing needs with the necessity of managing interest costs effectively. This strategy is crucial for maintaining fiscal stability and reducing the burden of debt servicing in a changing financial landscape. Future Treasury bill auctions will show the government's continued balance between funding requirements and cost management.