Interest rates neared 30% as the government Treasury bills auction was oversubscribed for the 10th consecutive week.

However, the rising yields come with increased costs for the government as interest expenses may likely go up.

Interest rates on the yield curve continued to surge as liquidity increased in the market.

However, the yields are lower than the current inflation rate of 31.7% (July 2022).

The rising interest rates indicate that government will spend more on interest payments for this year. Whilst the 91-day T-bill went for 27.7%, higher than the previous week’s 27.3% that of the 6-month traded at 29.2%, compared with 28.7% the preceding week.

Meanwhile, the government secured ¢1.09 billion from the sale of the short-term securities, about 33% oversubscription.

Once again, ¢911.3 million was mobilised from the 91-day bill as investors were more interested in that financial instrument.

¢185.82 million was however obtained from the sale of the 182-day T-bill.

Despite improved liquidity in the money market, Ghana’s interest rate remains one of the highest in sub-Saharan Africa.

Rising inflation, others pose upside risk to yields

Meanwhile, the rising inflation and downgrade of the country’s credit rating pose an upside risk to yields.

Inflation quickened to 31.7% (+190 basis points), fueled by non-food inflation, particularly transport, utilities, and household furnishing and equipment.

Databank Research said investors would continue to hold out for higher yields to cover the inflation-induced losses.

Ghana’s debt-to-Gross Domestic Product is expected to exceed 81% in 2022.

Securities	Bids Tendered (GH¢)	Bids Accepted (GH¢)	Interest rate
91 Day Bill	911.39 million	911.38 million	27.72%
182 Day Bill	185.28 million	185.28 million	29.29%
Total	1.096 billion	1.096 billion
Target	823 million