Ratings agency, Fitch, expects treasury bill yields to decline in 2024 as the government progresses with the external debt restructuring, whilst the economy recovers.

However, it expects T-bill yields to remain high by historical standards.

Revealing this in its latest assessment of the Ghanaian economy, the UK-based firm said inflation was still elevated while the fundamentals of the economy is not strong.  

“We still expect treasury bill yields to remain high by historical standards”.

This is coming despite T-bills yields easing by over 2.0 percentage points since January 2024.

On the financial sector, Fitch said strong profitability of banks operating in Ghana will complement the capital-raising initiatives encouraged by the Bank of Ghana, which directed undercapitalised banks to present credible recapitalisation plans last year.

“We expect several banks to raise core capital from shareholders and to seek capital support from Ghana Financial Stability Fund”, it added.

The government has committed the local-currency equivalent of $500 million to the fund and the World Bank’s International Development Association has committed $250 million.

It further said that foreign-owned banks are generally best placed to deal with the difficult operating environment in Ghana as they can call on extraordinary support from their large shareholders.

Investors show immense interest in T-bills

Last week’s T-bill auction gained increased participation from investors, partly following the improved liquidity level from the payment of coupons on the new bonds.

Investors pushed through total bids valued at GH¢6.97 billion against the auction target of GH¢6.29 billion. The treasury accepted all bids.

There was a bigger decline in yields relative to the declines recorded in recent auctions, partly as investors bid lower yields on improved liquidity in the market.

The 91-day yield declined by 61 basis points to 27.28%, while the 182 and 364-day decreased by 65 basis points and 60 basis points to 29.75% and 30.30% respectively.