Cost of borrowing marginally high inspite of the fact that T-Bills sale have been oversubscribed by 44.7%


Government Treasury bills continued to attract investors as it was oversubscribed for the 6th week running by 44.7%, according to weekly auctioning results by the Bank of Ghana.  

However, the cost of borrowing went up marginally, comparatively to that of last week.

The government was targeting a sale of GH¢889 million, but got GH¢1.28 billion worth of bids tendered by the investors.  It actually however accepted a little above GH¢1.13 billion.

The interest rate of the 91-day T-Bill which is one of the key benchmark indicator in pricing loans went up by 0.15 percentage points [13.11% recorded last week] to 13.26%.

However, that of the six month Treasury bill fell marginally, but the amount government accepted was small relative to that of the 91-day T-Bill.

For the 91-day T-Bill, the government accepted GH¢1.01 billion though the bids tendered were GH¢1.16 billion.

With respect to the 182-day Treasury bills, the bids tendered were GH¢124.3 million which government accepted all.

The considerable oversubscription of the T-Bills is good for the government as it is an indication of liquidity in the economy.

However, some are concerned about the crowding out of the private sector from access to funds because of the continuous substantial investment in T-Bills by the banks.

But others also believed that since government has been rejecting some of the bids, there are some money readily available for banks to on lend to consumers.

Importantly, investor interest continue to surge despite the lower yield, compared to a month ago when the interest rate was slightly high. Despite covid-19 pandemic and high debt to Gross Domestic Product, Ghana’s economy continue to excite many from all fronts, following a successful Presidential and Parliamentary elections in December last year.

Fast forward, analysts are hopeful interest rates on Treasury bills will fall further to reduce government’s cost of borrowing. And this will be underpin by reduction in the general price levels of goods and services.

But other market watchers will also be hoping that it will somehow translate into a slight ease in cost of credit.