Treasury Rates [February 6, 2023]

Security	Interest Rates
91 – Day Bill	35.7454%
182 – Day Bill	35.8100%

The yields on the government’s short-term papers cleared higher this week after weeks of mixed results following the lack of clarity about the direction of future interest rates and as inflation rose at a much slower pace to close last year at 54.1%. However, with the central bank’s monetary policy committee delivering its first policy hike in 2023, the market understood this as a sign of the prevalence of upward price pressures on consumer goods and services, thus bidding higher yields for the government’s short-term securities. As inflation pressures continue to persist following the upward review in VAT, and increases in the prices of utilities, fuel and among others, it is expected that Treasury yields will continue to remain pressured upwards in the near term.

The yield on the 91-day bill strengthened by 3 basis points (bps) this week to send its year-to-date (YTD) gains to 1.08%. It climbed up from 35.7144% posted last week to clear at 35.7454% this week.

The 182-day bill posted its first weekly gain in 5 weeks, coming in with a jump of 5 bps to trim its YTD losses to 0.47%. It cleared at 35.8100% this week, up from 35.7550% posted last week.

Week-on-Week Changes

Tenor	Previous	Current	w-o-w Change	w-o-w % Change	Year-to-Date
91 – Day	35.7144%	35.7454%	0.03	0.09%	1.08%
182 – Day	35.7550%	35.8100%	0.05	0.15%	-0.47%

Auction results of tender 1836 further affirmed the growing but strong demand for Treasury securities as institutional and regulated institutions invade the government’s short-term securities space on the back of the absence of new issuances of longer-dated papers. The government achieved an oversubscription rate of 37.3%.

A total of GHS 1,953.83 million worth of bids were tendered for the 91 and 182 tenors against the government’s target amount of GHS 1,423.00 million. The government, constrained by a tight funding 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 2,759.00 million from 91-day, 182-day, and 364-day bills.