Ghana’s domestic borrowing effort faltered again last week as its Treasury-bill auction recorded a sharp undersubscription amid weakening investor demand and rising market caution.
The auction, the seventh consecutive undersubscribed sale, underscored persistent investor concern and signalled a widening shift toward alternative financial instruments offering more attractive returns.
According to data released by the Bank of Ghana, government securities were undersubscribed by 30.45%, with the state targeting GHS5.67 billion but attracting only GHS3.94 billion across the 91-, 182-, and 364-day tenors. The government accepted GHS3.83 billion, slightly below the total bids tendered.
Investors retreat to safer, short-term positions
Market analysts say institutional investors appear increasingly reluctant to commit funds to the Treasury market, citing tighter liquidity conditions and comparatively modest yields. Many are redirecting capital to higher-yielding products in the private debt and money markets, deepening pressure on government fundraising efforts.
The 91-day bill continued to dominate trading activity, attracting over 77% of total bids, reflecting investor preference for shorter-term exposure amid uncertainty over interest rate direction and macroeconomic stability.
A detailed breakdown of tendered and accepted bids showed:
91-day bill: GHS3.07bn tendered; GHS2.97bn accepted
182-day bill: GHS613.27m tendered; GHS608.2m accepted
364-day bill: GHS257m tendered; GHS254m accepted
Despite the significant undersubscription, yields remained relatively stable across the curve. The 91-day rate edged down to 11.02%, the 182-day settled at 12.66%, and the 364-day ticked up slightly to 13.08%.
Analysts say the limited yield adjustments suggest the government remains focused on containing debt-servicing costs rather than aggressively raising rates to attract more bids. But they warn the approach could make it harder for Ghana to consistently meet domestic borrowing targets, especially during periods of tighter market liquidity.
The repeated shortfalls, they add, are a key indicator of investor sentiment toward Ghana’s domestic debt as the country navigates a challenging economic environment following its debt restructuring and IMF-supported reforms.
Finance observers say the ongoing trend will test the government’s ability to balance debt sustainability objectives with the need to secure enough funds for weekly budget support.
