Treasury Rates [October 17, 2022]

The yields on the government’s short-term Treasury bills were up this week from the previous week’s levels in line with the recent inflation print. The inflation rate firmed up at a more than 21-year high in September buoyed by the coming into effect of the upward adjustments in utility tariffs coupled with the continuous fall in the value of the local currency against its major trading partner currencies. September’s inflation rate was reported at 37.2%, up from 33.9% in August, the sixteenth successive jump in the inflation rate. Expectation of higher inflation numbers is further anticipated to drive Treasury yields upward in the short to medium term.

The 91-day bill’s year-to-date performance topped 150% after the paper gained 43 basis points (bps) this week to build on last week’s 51 bps gain. It climbed up from 30.9634% posted last week to clear at 31.3943% this week.

The yield on the 182-day bill was up by 30 bps this week as it extended its recent modest gains. It cleared at 32.2360% this week, up from 31.9402% posted last week.

The 364-day bill came in with a moderate gain this week with a 52 bps jump compared to last issuance’s 107 bps gain. It rose from 31.5473% recorded last week to 32.0690% this week.

Week-on-Week Changes

Tenor	Previous	Current	w-o-w Change	w-o-w % Change	Year-to-Date
91 – Day	30.9634%	31.3943%	0.43	1.39%	150.64%
182 – Day	31.9402%	32.2360%	0.30	0.93%	144.00%
364 – Day	31.5473%	32.0690%	0.52	1.65%	92.68%

Auction results of tender 1820 revealed that demand this week failed to beat the target amount as investors remained cautious of the impact of the recent inflation reading on yields and the government’s mounting debt levels. The target amount was undersubscribed by a little over 10.0%.

A total of GHS 974.5 million worth of bids were tendered for the 91, 182, and 364 tenors against the government’s target amount of GHS 1,088.00 million. The government, constrained by a tight financing gap, subsequently accepted all bids tendered.

In the week ahead, we expect the government to return to the domestic market in an attempt to mobilize GHS 1,561.00 million from 91-day and 182-day bills.