The Bank of Ghana’s limited issuance of the 56-day bill triggered a strong return of institutional demand for treasury bills.

This is because investors moved to lock in current yields ahead of further declines.

According to Databank Research, yields declined sharply in line with our expectations with demand far exceeding the Treasury supply.

“We anticipate another oversubscription in the coming week, supported by renewed institutional participation and the relatively higher holding period return (HPR) on the 91-day bill compared to the 56-day bill”.

Demand for T-bills surged in last week’s primary auction, with total bids reaching 20.98 billion.

The Treasury accepted 10.64 billion, comfortably covering the 5.44 billion target by 195% oversubscription and maturities of 5.24 billion by more than 200%.

Yields on the 91-day, 182-day, and 364-day bills declined sharply.

They went down by 93 basis points, 41 basis points and 68 basis points, settling at 13.73%, 14.62%, and 14.74%, respectively.  

The issuance of the BoG bills form part of the Central Bank’s broader Open Market Operations framework, through which it seeks to mop up excess liquidity in the banking sector, temper inflation expectations and align short-term interest rates with its policy objectives.