The government’s next Treasury bill auction slated for Friday, July 7, 2023, could be oversubscribed.

Most analysts believe the relatively smaller size of the offer for the short-term securities would trigger oversubscription.

The government is seeking to borrow ¢1.575 billion via T-bills this week on the treasury market.

This is way below the targets for the last three months’ auction.

“While we expect yields to continue the upward trek, the auction could be oversubscribed, given the relatively smaller size on offer”, GCB Capital pointed out.

The sale is expected to be done via the issuance of the 91-day, 182-day and 364-day T-bills.

Last week's T-bill auction attracted total demand worth ¢2.39 billion against the target of ¢2.91 billion, and a refinancing obligation of ¢1.74 billion.

The government accepted all the bids which exceeded the refinancing obligation for the week by 38%.

However, participation at the auction was disappointed relative to the target, with the demand and uptake falling 18% short of the auction target.

Yields continued higher, with the pace of increase even more pronounced last week. The 91-day climbed 177 basis points to 23.95%, with the 182-day yield also rising 36 basis points to 25.80%. While investor demand is steady and firm, it appears the larger target sizes stemming from the Treasury's strong appetite for short-term funds underscore the under subscriptions in recent weeks and the continuous climb in yields.