Source: newsthemegh.com
The upcoming government treasury bill (T-Bills) auction has received a GHC3.90 billion oversubscription from investors looking to profit from rising interest rates on government-dated securities.
This explains a 15% increase in over subscription, demonstrating investor demand for higher yields. Despite this, several experts have advised against investing in government-dated securities with high interest rates.
The sale of the government’s 91-day and 182-day bills was intended to bring in GHC2.08 billion, but it actually brought in GHC2.4 billion at this week’s auction.
Over the last week, the yields on government-dated securities increased roughly by 0.73 basis points and 0.98 basis points, respectively, from 20.4 percent to 21.1 percent and 22.9 percent to 23.9 percent over the 91- and 182-day bills.
Even though the government has received 600 million of the three billion dollars from the International Monetary Fund (IMF), interest rates on government securities have started to rise.
In its assessment on Ghana’s three-year Extended Credit Facility (ECF) program, the International Monetary Fund (IMF) stated that the country’s debt restructuring plans still leave a sizable requirement for T-bill issuance in the near future.
The fund claimed that even if program implementation and outreach could reduce financing risks, the government was still subject to unpredictability in domestic market conditions.
The DDEP saw the government exchange 12 new bonds with longer tenors and lower coupon rates for a total of GHC82 billion in old bonds.
Additionally, the exchange of dollar-denominated bonds and cocoa bills is currently advanced.
In order to start the restructuring of the nation’s US$5.4 billion debt to bilateral partners, the Creditor Committee, which is co-chaired by China and France, has also been established.
Additionally, the government has been working with its commercial creditors to restructure debts totaling US$14 billion since December 2022.
Government bonds were sold at single digit levels after the government restructured its debts under the DDEP. The 12 bonds were traded at 9% as part of the debt swap. Since government bonds were too costly, many experts felt that this was a sign that the market was readjusting.
The government rejected all investor offers to purchase treasury bills in March, claiming that the interest rate of roughly 35% was too excessive.
To refinancing maturing debts worth GHC2.55 billion, the government at the time intended to raise GHC2.78 billion through the T-bills.
Financial analysts claim that a significant portion of the government debt restructuring process was caused by the high interest rates on government bonds, particularly domestic bonds, which made up around 52% of the total government public debt.