Treasury Rates [May 16, 2022]

Security	Interest Rates
91 – Day Bill	18.2262%
182 – Day Bill	19.2623%
364 – Day Bill	21.7276%

Ahead of a crucial monetary policy committee meeting later in the week where committee members face the bigger dilemma as to the margin of rate increase to deliver as well as how many rate hikes to hand down in the near term after the inflation rate shot up to an 18-year high, Treasury bills extended their upward trajectory but still trended below the inflation rate of 23.6%. Consumer prices surged to a record high in April, led by transport, food, and housing, electricity & other fuels. We expect the inflation rate to continue to trend higher as key risks to the inflation outlook persist.

The yield on the 91-day bill climbed up by 35 basis points (bps), building on previous week’s 47 bps gain. It cleared at 18.2262% this week, up from 17.8800% recorded last week.

After posting a moderate gain last week, the yield on the 182-day bill rose faster compared to last week’s performance, coming in with a 46 bps increase this week. It cleared at 19.2623% this week, up from 18.8060% recorded last week.

The 364-day bill was the star performer for the week, with an increase of 108 bps over last week’s rate. It moved up from 20.6521% at last week’s issuance to 21.7276% this week.

Week-on-Week Changes

Tenor	Previous	Current	w-o-w Change	w-o-w % Change	Year-to-Date
91 – Day	17.8800%	18.2262%	0.35	1.94%	45.51%
182 – Day	18.8060%	19.2623%	0.46	2.43%	45.80%
364 – Day	20.6521%	21.7276%	1.08	5.21%	30.54%

Auction results from the Bank of Ghana (BoG) tender 1798 revealed that for the eighth time running, demand fell short of the Government’s target as investors sat on the fence in the face of the fast pace of the inflation increases.

A total of GHS 1,248.47 million worth of bids were tendered for the 91, 182, and 364 tenors against the government’s target amount of GHS 1,961.00 million. The government, constrained by a continued and sustained sluggish demand for its securities accepted all bids tendered.

In the week ahead, we expect the government to raise a total of GHS 875.00 million from 91-day and 182-day bills. Securities ranging from 2-year up to 6-year are tabled to be issued in the second quarter.