Treasury Rates [July 3, 2023]

Security	Interest Rates
91 – Day Bill	23.9540%
182 – Day Bill	25.7968%

Treasury yields began the second half of the year adding to the impressive recovery observed in the first half of the year. The yields on the government’s short-dated papers saw a drastic and sharp decline between February and March after the government sought to normalize rates to reduce its interest burden and as inflation began to ease. The rates, however, reversed their course as Treasury bills became a key funding option for the government to meet its maturing debt obligation and to supplement the national budget. The prevalence of the upward price pressures on consumer goods also contributed to the upturn in the Treasury rates. Inflation for June is due next week and analysts are predicting that the inflation rate will not see any major decline from its current level. Treasury yields are expected to persist further upward in the near term.

The 91-day bill edged up by 98 basis points (bps), adding onto last week’s 128 bps jump. It cleared at 23.9540%, up from 22.9715% recorded last week.

The yield on the 182-day bill went up by 36 bps, slower than an increase of 47 bps recorded last week. It moved up from 25.4414% last week to clear at 25.7968% this week.

Week-on-Week Changes

Tenor	Previous	Current	w-o-w Change	w-o-w % Change	Year-to-Date
91 – Day	22.9715%	23.9540%	0.98	4.28%	-32.26%
182 – Day	25.4414%	25.7968%	0.36	1.40%	-28.30%

Auction results of tender 1857 revealed that investors remained skeptical of the government’s increased borrowing from the Treasury market amid hints of an impending second domestic debt restructuring which is expected to target pension funds and debt owed to independent power producers. The government’s target was thus undersubscribed by 17.8% this week, failing to replicate last week’s oversubscription.

A total of GHS 2,393.24 million worth of bids were tendered for the 91 and 182 tenors against the government’s target amount of GHS 2,913.00 million. The government subsequently accepted all GHS 1,906.31 million and GHS 486.93 million worth of bids tendered for the 91-day and 182-day papers respectively.

In the week ahead, we expect the government to return to the domestic market in an attempt to mobilize GHS 1,575.00 million from 91-day, 182-day, and 364-day bills to meet GHS 1.74 billion maturing papers due next week.