Another Massive T-Bill Oversubscription — The government has returned nearly GH¢ 8.4 billion worth of bids back to investors in the latest treasury bill auction.
The latest auction results reveal that there was a massive oversubscription of the government’s short-term instruments.
Although the government planned to borrow a total of GH¢ 8.1 billion in last week’s auction, a total of GH¢ 17.7 billion bids were tendered by investors. This represents over 119.38% of the planned target of the government.
Amidst the massive oversubscription, the government only accepted an additional GH¢ 1.37 billion to its target, accepting a total of GH¢ 9.4 billion.
The excess of GH¢ 8.4 billion representing 46.9% of the total offers was returned back to the investors.
This is not the first time the government has rejected bids from investors. The government in the previous auction rejected an amount of GH 2.9 billion.
Fixed Income and Currency Trader, Kodzo Letsa revealed to Accra Street Journal that the government rejected the bids due to the high interest rates demanded by the investors.
In his words, the previous rejection by the government was in response to the “greed” of investors who were demanding yield rates higher than the approved rates.
“Some investors were greedy and wanted yields above what was proposed in the pricing guidance and this led to the government rejecting these expensive funds,” he told Accra Street Journal.
It is however unclear if the recent rejection of about GH¢8.4 billion worth of bids was also a result of the investors demanding interest rates higher than the approved pricing guidance.
Meanwhile, some other analysts also contend the ability of the government to reject bids from investors is an indication that it is in control of the market, which is currently flooded with cash looking for investment opportunities.
This also signals that the government is very careful and disciplined in its approach to borrowing from the short-term market.
It is highly expected the recent developments in the market will continue to ensure that the interest rates persistently drop as experienced in previous weeks.
This will enable the government to borrow at a cheaper rate and keep the rate of debt accumulation under control.
