Investors sustain interest in short-dated Ghana T-bills

Investors in Ghana's Treasury bill market have experienced a mixed trend in recent times, with varying subscription levels and interest rates. The Bank of Ghana has rejected bids for short-term instruments, revealing a high appetite for short-dated Treasury Bills and reflecting confidence in the market as interest rates have fallen to 15 per cent. Analysts anticipate that the government will continue with a cautious borrowing approach in the upcoming treasury bill auction scheduled for Friday this week. Oforiwaa Attipoe, Manager of Global Market Sales for Ghana at Standard Bank, provided insights into the current market dynamics and discussed the implications for investors and the government. Attipoe highlighted the fluctuations in auction targets and the challenges faced by the government in managing fiscal and debt issues. Despite achieving a considerable amount close to the target of $6.54 billion in the last auction, undersubscriptions in previous weeks signal the need for the government to reassess its auction strategy. The interest rates for different T-bill durations, ranging from the 91-day to 365-day, were noted at 15.45%, 16.18%, and 18.62% respectively, prompting a call for recalibration of auction amounts to meet market demand effectively. In response to the current market sentiments, investors are seeking clarity and predictability in auctions, expressing dissatisfaction with the prevailing interest rates. Attipoe emphasized the importance of aligning investors' interests with government borrowing terms to prevent inflationary pressures and currency volatility. The government's focus on maintaining a conservative borrowing stance aligns with its budget priorities of increasing revenue and limiting expenditure, necessitating a strategic balance in setting interest rates to attract investors while managing inflation. The recent IMF-Richmond Staff Level Agreement on the Extended Credit Facility Arrangement has boosted investor confidence in Ghana's market. Attipoe emphasized the significance of global dynamics and foreign portfolio investors in influencing market trends. With improvements in the city's performance and gross reserves exceeding targets, the Central Bank's interventions have stabilized the market, contributing to investor confidence. Maintaining this momentum through effective policy decisions and market interventions is crucial for sustaining economic stability and investor interest. Looking ahead, Attipoe projected a positive outlook for the Ghanaian currency, anticipating further appreciation backed by ongoing Bank of Ghana interventions. With year-to-date depreciation at a modest 2.36 percent and continuous support for market liquidity, the currency is poised for stability and potential appreciation. The Bank's planned interventions and market mechanisms are expected to bolster the currency's performance, leading to a more favorable outlook for investors and economic sectors. In conclusion, the Ghanaian Treasury bill market reflects a mix of investor sentiment, government borrowing dynamics, and market stability indicators. As the government navigates the balance between borrowing needs and investor interests, strategic decisions in setting interest rates and auction targets will be pivotal in sustaining market confidence and economic growth.