Ghana's short-term debt market, specifically Treasury Bills (T-Bills), is facing renewed challenges. After a brief period of investor confidence, the market has experienced its second consecutive undersubscription, raising concerns about government borrowing and fiscal stability. The latest T-bill auction fell significantly short of its target, despite a slight decrease in yields, signaling investor hesitancy.
Auction Results: A Cause for Concern
The Bank of Ghana (BoG) reports that the government aimed to raise GHC6.82 billion but only secured GHC4.76 billion. This represents a shortfall of approximately GHC2.06 billion, or 30.25%. This follows a similar undersubscription in the previous auction, highlighting a persistent lack of investor appetite for short-term government debt.
The 91-day bill attracted the most bids at GHC3.49 billion, followed by GHC785.31 million for the 182-day bill and GHC487.59 million for the 364-day bill. Interestingly, rates on the 91-day and 364-day bills saw slight declines (from 10.6976% to 10.6747% and from 12.9224% to 12.877% respectively), while the 182-day bill saw a marginal increase (from 12.4385% to 12.4693%). This suggests investors are demanding higher returns for mid-term maturities due to market uncertainty.
Government's Response and Future Borrowing Plans
In a notable move, the government accepted all bids submitted, indicating a pressing need for liquidity to meet short-term obligations. This decision, unprecedented in recent weeks, reflects the urgency of the situation.
Domestic Borrowing Strategy
Looking ahead, the government plans to borrow GHC75.7 billion from the domestic market between October and December 2025. According to the BoG's issuance calendar, GHC67.5 billion will be used to roll over existing debts, while GHC8.2 billion will support government expenditure. This borrowing will primarily involve 91-day, 182-day, and 364-day Treasury bills, with potential reopenings of existing bonds under the Domestic Debt Exchange Programme (DDEP).
The BoG emphasizes that this strategy aligns with the government's Medium-Term Debt Management Strategy, aiming to deepen the domestic capital market, extend debt maturity profiles, and promote transparency in public borrowing. Ghana's reliance on domestic borrowing is crucial given limited access to international capital markets due to high borrowing costs.