Government Rejects Overpriced Treasury Bids

The market’s expectation of the government returning to the domestic money market to mobilize GHS 2,776.00 million from 91-day, 182-day, and 364-day bills at last Friday’s Treasury auction did not materialize after the government reportedly rejected all bids tendered for its short-term papers.

According to reports, the government was willing to borrow at interest costs not exceeding 30.0000%, however, the submitted bids were quoted at rates above the government’s expectations. The government was aiming to raise its intended target amount of nearly GHS 2.78 billion this week to settle maturing GHS 2.55 billion Treasury papers set to mature on March 6 as well as to support other government expenditures. The government, however, reopened the bids allowing participants to place new bids.

The government’s rejection of the tendered bids is believed to be in line with moves by the government to push down Treasury yields at a time when inflation is set to witness some stability. The decision could also be attributable to the prevailing rates on the government’s longer-dated papers which are presently hovering over the region of 8.0000% to 10.0000%.

Last week, the government achieved an oversubscription rate of 75.7%, where it accepted all GHS 5.07 billion worth of bids tendered for its 91 through to 364 tenors.

As inflation numbers continue to trend at exceptionally high levels, it is expected that the market will communicate its perception of slowing interest rates in the ensuing Treasury auctions.