The government may face complicated refinancing options in repaying Treasury bills that will mature in October 2022

According to the Weekly Fixed Income Update by Databank Research, a refinancing offer on October 3, 2022, may not get much traction due to the expected domestic debt restructuring.

It, therefore, pointed out that the government will likely supplement any refinancing offer with the Bank of Ghana support to get more favourable refinancing options.

“Last week, Fitch Ratings downgraded Ghana’s Issuer Default Rating from ‘CCC’ to ‘CC’. They cited possible debt restructuring, high debt service, and constrained financing as reasons for the recent downgrade. This is expected to complicate the refinancing options of the Treasury on the maturing paper on October 3, 2022 as pricing for a refinancing offer will likely be unfavourable”.

The government is expected to offer ¢905 million across the 91-day to 182-day bills to refinance total maturities worth ¢786.6 million.

Treasury fell short of its target first time in 15 weeks

The Ghanaian Treasury fell short of its auction target during last week’s (September 23, 2022) T-bill offer for the first time in 15 weeks.

The shortfall in uptake was mainly attributed to subdued bids, with total bids submitted constituting 89.59% of the auction target.

The weighted average yields of T-bills currently stand at 30.18% for the 91-day, 31.34% for the 182-day and 30.47% for the 364-day tenors.

Investors to maintain interest in near-term maturities

Meanwhile, on the bond market, investors will maintain interest in near-term maturities in the secondary market.

“We expect investors to focus on T-bills in the primary market. Investors may also be on the lookout for a bond offering to refinance the maturing paper on October 3, 22. We expect investors to maintain interest in near-term maturities in the secondary market”.