Treasury Rates [August 7, 2023]

Security	Interest Rates
91 – Day Bill	25.5723%
182 – Day Bill	27.2822%
364 – Day Bill	30.4913%

The yields on the government’s short-term securities cleared higher this week, adding to its recent upward streak as yields steadily rise to inch closer to the inflation rate. Treasury bill rates continue to increase on the back of the government’s restricted funding options for public spending and to meet maturing debt obligations. The recent spike in Treasury rates has also been supported by expectations of higher inflation numbers as risks to the inflation outlook continue to linger forcing the Monetary Policy Committee of the Central Bank to resume its hard stance against inflation.

The yield on the 91-day bill cleared by a higher margin this week with a jump of 33 basis points (bps) from last week’s 32 bps increase. It rose from 25.2417% posted last week to clear at 25.5723% this week.

The 182-day bill posted a moderate gain of 13 bps this week, failing to replicate last week’s big move. It cleared at 27.2822% this week, up from 27.1475% posted last week.

The yield on the 364-day bill similarly posted a modest gain, adding 19 bps to its recent gain. It moved up from 30.3060% posted last week to clear at 30.4913% this week.

Week-on-Week Changes

Tenor	Previous	Current	w-o-w Change	w-o-w % Change	Year-to-Date
91 – Day	25.2417%	25.5723%	0.33	1.31%	-27.69%
182 – Day	27.1475%	27.2822%	0.13	0.50%	-24.17%
364 – Day	30.3060%	30.4913%	0.19	0.61%	-15.05%

Auction results of tender 1862 showed that after four weeks of oversubscriptions, the government failed to meet its target this week as investors began to remain wary of the increasing interest costs on the government’s assets amidst the ongoing debt restructuring.  The government’s target was subsequently undersubscribed by 3.6%.

A total of GHS 2,179.14 million worth of bids were tendered for the 91, 182, and 364 tenors against the government’s target amount of GHS 2,261.00 million. The government accepted all GHS 2,033.73 million worth of the bids tendered for its 91-day and 182-day bills but accepted GHS 144.62 million out of the GHS 145.02 million worth of bids tendered for its 364-day bill.

In the week ahead, we expect the government to return to the domestic market in an attempt to mobilize GHS 3,065.00 million from 91-day, 182-day, and 364-day bills to meet GHS 2.84 billion maturing short papers due next week as well as to create buffers for the upcoming interest payments on the DDEP bonds.