Treasury Bill Demand Surges Following Policy Rate Cut

Mpc Meeting

Ghana’s wealth marketplace recorded a crisp rebound successful request pursuing the Bank of Ghana’s (BoG) 350 ground constituent argumentation complaint chopped to 18 percent, with investors driving down Treasury measure yields and importantly overshooting government’s backing people astatine the latest auction.

At Friday’s tender, authorities raised GH¢5.78 billion, much than treble its GH¢2.86 cardinal target. Yields connected the 91 day, 182 time and 364 time bills fell by an mean of 10 ground points arsenic the complaint chopped filtered rapidly into abbreviated word backing costs. For this week’s auction, the Treasury aims to rise GH¢5.81 billion, suggesting continued reliance connected abbreviated word securities to conscionable adjacent word financing needs.

This follows respective weeks of undersubscriptions connected the wealth market, wherever investors had shown reduced appetite for authorities indebtedness instruments.

Fincap Securities stated successful an capitalist enactment that the oversubscription signals a beardown liquidity effect to the cardinal bank’s assertive easing move. The steadfast noted that the caller chopped fed done to wealth markets, adding that investors had rotated into authorities bills arsenic yields adjusted lower.

The complaint cut, announced pursuing the Bank’s 127th Monetary Policy Committee (MPC) meeting, marked a continuation of the easing rhythm that has brought cumulative cuts this twelvemonth to 1,000 ground points. The cardinal slope cited improved ostentation dynamics, a unchangeable currency and stronger economical indicators arsenic justification for the decision.

Governor Dr. Johnson Pandit Asiama said the committee viewed the caller disinflation advancement arsenic precise overmuch successful enactment with the disinflation programme, adding that header ostentation has eased to the Bank’s 8 percent cardinal people for the archetypal clip since 2021.

Despite the beardown auction performance, Treasury measure trading successful the secondary marketplace weakened, dropping 33.77 percent to GH¢1.84 cardinal arsenic investors appeared to clasp positions alternatively than rotate out. Activity successful aged bonds slipped by 8.54 percent.

Curve dynamics besides shifted pursuing the complaint cut. Constant Capital said Thursday’s marketplace remained anchored astatine the beforehand extremity wherever request for 2027 to 2029 bonds remained strong, with Feb 2027s and Feb 2028s trading betwixt 14.50 percent and 14.70 percent. The steadfast reported pockets of involvement further retired the curve, including trading successful 2038s astatine astir 16 percent, signalling a gradual instrumentality of assurance successful longer maturities.

Constant Capital noted that momentum is apt to persist successful coming sessions, supported by the accommodative argumentation stance and sustained bidding crossed abbreviated to mid tenor bonds. The brokerage said investors are repositioning for a little complaint environment.

Analysts astatine Apakan Securities said the complaint chopped aligns with their expectations and reflects an improving macro backdrop. The steadfast said ostentation is apt to stay wrong the Bank’s 8 percent positive oregon minus 2 percent people set done twelvemonth end, providing scope for further easing successful 2026 if existent trends persist.

Apakan said that fixed the continued easing of terms pressures, they expect country for further cuts barring adverse shocks.

The Bank of Ghana reinforced its argumentation displacement with an operational adjustment, announcing a instrumentality to the 14 time measure arsenic its superior unfastened marketplace instrument.

Dr. Asiama said the determination represents a reset to wherever the cardinal slope is expected to beryllium operating, arguing that shorter instruments volition heighten liquidity absorption and fortify monetary argumentation transmission.

The oversubscription comes aft authorities had struggled to conscionable its backing targets successful caller weeks, with investors showing reduced momentum successful their request for Treasury bills. Market analysts had linked anemic request to contention from alternate concern opportunities offering amended returns.

The turnaround successful capitalist sentiment reflects renewed assurance successful authorities securities pursuing the monetary argumentation adjustment. However, analysts enactment that sustained request volition beryllium connected maintaining macroeconomic stableness and continued advancement connected ostentation management.

The Treasury’s accrued borrowing people for this week suggests authorities remains focused connected gathering abbreviated word financing obligations done the home marketplace portion moving toward eventual instrumentality to planetary superior markets. Officials person indicated that immoderate Eurobond marketplace re introduction volition beryllium cautiously timed to guarantee favourable conditions.

Financial assemblage observers expect the little involvement complaint situation to gradually construe into reduced borrowing costs for businesses and households, perchance supporting broader economical activity. However, they caution that afloat transmission of argumentation complaint changes to commercialized lending rates typically takes respective months.

The wealth marketplace developments travel arsenic Ghana continues efforts to stabilize its system pursuing a challenging play marked by precocious ostentation and currency pressures. The caller argumentation easing reflects improved fundamentals but besides underscores the request for sustained fiscal subject to support capitalist confidence.