Ghana to auction gh¢6.61bn T-bills today

Ghana is gearing up to raise 6.6 billion cedis in today's treasury bills auction, aiming to refinance the 6.4 billion cedis maturing bills. The improved appetite for treasury issuance, driven by the low yield environment, is encouraging. Analysts at Databank believe that the continued issuance at near-target volumes could support funding needs without exerting upward pressure on yields. Wilson Zilevu, Fixed Income and Economic Analyst at Databank, shed light on expectations for the upcoming activities in the treasury bills and fixed income market. The government's strategy of rejecting bids in the first quarter T-bills auctions sparked curiosity. Wilson explained that this move was part of the government's strategy to manage the level of indebtedness effectively. Investors responded to this strategy, understanding the need for a balanced approach to borrowing and lending. As the treasury offers over 6 billion Ghana cedis across various paper durations, expectations are set for robust subscription levels and favorable yield outcomes. The anticipation for oversubscription persists, fueled by limited alternative investment options available to individual investors. While prime deposits provide a rate of 10.5 percent, the treasury still offers 15 percent returns, albeit lower than in 2024. This attractive yield differential sustains interest in T-bills. Moreover, the government's improved target offer is likely to result in a more cohesive acceptance of bids falling within the ideal range. On a positive note, the recent feedback from the IMF on Ghana's Extended Credit Facility Arrangement is bolstering investor sentiment. The outlook for the secondary bond market remains cautiously optimistic. Wilson mentioned that investors have been relatively cautious, awaiting the IMF outcome. Modest activities are expected, with some intermittent exchanges. The government's plan to potentially reopen the bond market, targeting pension funds, is a focal point for market participants. The potential reopening of the bond market may involve either tapping existing bonds or issuing new debts that mature beyond upcoming maturities, specifically focusing on 2027 and 2028 maturities. Despite the bonds currently being below investment-grade status, risk-appetite investors have shown interest, leading to some minor transactions. Overall, the market anticipates a period of modest activity in the weeks ahead. In conclusion, Ghana's treasury bills auction signifies a positive trend in the market, driven by the compelling yield environment and strategic government approaches. With investors eyeing future developments and remaining mindful of potential market shifts, the landscape appears poised for continued stability and growth.