Investor demand in government short-term securities remained high last week, allowing the Treasury to raise GH1.51 billion more than its objective in the most recent auction.
The 91-day, 182-day, and 364-day Treasury bills attracted bids totalling GH¢9.10 billion, of which GH¢9.08 billion was accepted, according to data from the Bank of Ghana.
This led to a 29.41 percent surplus demand, which is the eighth auction in a row when demand has beyond the government’s target.
The improving liquidity circumstances in the financial system, which are mostly driven by institutional investors, are largely responsible for the maintained appetite, according to market analysts.
With bids of GH¢6.54 billion, nearly all of which (GH¢6.53 billion) were accepted, the 91-day Treasury bill continued to be the most alluring instrument.
The 364-day bill received GH¢1.50 billion in bids, of which GH¢1.49 billion was accepted, but the 182-day bill got bids of GH¢1.06 billion, of which GH¢1.05 billion was picked up.
As a result of the robust demand environment, yields increased across the majority of maturities.
The 182-day bill grew by 6 basis points to 12.56 percent, and the 91-day bill jumped by 6 basis points to 11.17 percent from 11.11 percent.
The 364-day bill, on the other hand, defied the trend by slightly declining from 12.93 percent to 12.90 percent by 3 basis points.
Pricing dynamics between investors and the Treasury were blamed by analysts for this minor fall.
They observe that while some investors are attempting to obtain higher compensation by submitting bids above the government’s preferred yield levels, the Treasury seems to be rejecting these higher-priced bids in order to control borrowing costs, which results in yield compression at the longer end of the short-term curve.
As it continues to take advantage of good market demand to cover its funding needs, the Treasury is aiming for GH¢7.14 billion at its upcoming auction across the three short-term instruments.
Source: newsthemegh.com