Pressure mounts as demand for T-bills falls short of issuance target

For the first time this year the demand for Treasury bills (T-bills) on the primary market has eased, falling short of government’s issuance target in May 2023.

Investors showed reduced momentum in their demand for 91- to 364-day bills, raising concerns about the Treasury’s ability to meet its debt obligations amid tighter liquidity conditions in the market.

During May 2023, investors tendered GH¢14.04billion across the 91- to 364-day bills, reflecting a 4.2 percent under-subscription compared to the Treasury’s target of GH¢14.66billion. However, the Treasury was able to issue the amount tendered. The waning demand can be attributed to lingering effects of the Domestic Debt Exchange Programme, which has stifled demand for T-bills.

Despite the under-subscription, the amount sold by the Treasury was sufficient to cover a face value (FV) of GH¢12.23billion maturing value during the month across all the bills, representing a maturity cover of 1.12x. The refinancing needs in May 2023 were the highest for the period with GH¢12.23billion – followed by GH¢9.35billion in March 2023, GH¢8.06billion in February 2023, and GH¢6.72billion and GH¢6.42billion in January and April respectively.

May 2023 stood out as the month with the highest targetted issuance by the Treasury, aiming to reach GH¢14.66billion compared to GH¢8.19 billion, GH¢8.78 billion, GH¢11.19 billion and GH¢6.75 billion for January to April respectively.

Yields sustained their uptrend

Yields on Treasury bills continued their upward trend throughout the month, presenting a significant risk to government’s debt sustainability in the aftermath of the unprecedented domestic debt exchange programme (DDEP).

In the month’s Treasury-bill auctions, yields experienced marginal increases as anticipated. The 91-day bill rose from 19.95 percent to 20.80 percent, while the 182-day bill increased by 91 basis points to 23.62 percent from 22.71 percent. Similarly, the 364-day bill jumped by 76 basis points to 28.02 percent from 27.26 percent.

The rising borrowing costs for government due to higher yields on Treasury bills add further strain to an already burdened fiscal position. As the cost of government borrowing increases, it becomes increasingly difficult to manage the existing debt burden and fulfil future financial commitments.

To address the escalating Treasury yields, government implemented measures in Q1-2023 reducing bids and capitalising on strong demand for bills to lower the cost of borrowing. Consequently, the yield on 91-day bills dropped from 35.36 percent in Q4-2022 to 19.39 percent in Q1-2023. That of the 182-day bill declined from 35.98 percent to 21.44 percent, and the 364-day bill fell from 35.89 percent to 25.66 percent during the same period.

Market expectations indicate that yields on Treasury bills will continue to fluctuate in the near-term, with the potential for further increases. However, the real return on Treasury bills will remain negative until inflation returns to a single-digit figure or drops below 20 percent. The projected range for Treasury yields in the near-term is around 20 percent to 25 percent.

Despite initial anticipation of a significant drop in Treasury yields to a range of 15 percent to 18 percent by end of Q3-2023, the current trend suggests a persistent rise in yields even amid the secured IMF bailout. This poses additional challenges for government’s financial management and debt sustainability.



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For the first time this year the demand for Treasury bills (T-bills) on the primary market has eased, falling short of government’s issuance target in May 2023.