Ghana’s fixed-income market is witnessing a major shift as investors increasingly abandoning government Treasury bills (T-bills) in favour of Bank of Ghana (BoG) bills, which are currently offering significantly higher returns—reportedly up to 28%.
This shift comes in the wake of a sharp decline in T-bill yields, underscoring growing concerns over government borrowing strategies and liquidity conditions.
According to analysts, the trend is being driven by the recent adjustment in the Monetary Policy Rate (MPR), which was hiked by 100 basis points in an attempt to attract investor interest toward the BoG’s Open Market Operations (OMOs) securities.
These securities, which are designed to mop up excess liquidity, are offering substantially more attractive returns than standard government T-bills, prompting investors to redirect funds.
Investment research firm IC Insights noted, “We expect the 100 basis points hike in the policy rate to sustain attraction for the OMOs, draining demand for T-bills and limiting the downside for yields.
However, the ongoing squeeze on public spending will ease the financing requirement and avert an upward reversal in T-bill rates, barring FX shocks.”
In the most recent auction, the government’s T-bill issuance recorded an undersubscription.
Out of a GH¢4.39 billion target, only GH¢1.69 billion was accepted, after rejecting GH¢2.37 billion in bids that exceeded the government’s desired yield range.
This outcome covered just 40% of upcoming maturities, which totaled GH¢4.22 billion, highlighting increasing pressure on the government’s financing strategy.
Yields across all three T-bill tenors declined marginally week-on-week, falling by 6 basis points on the 91-day bill (to 15.65%), 23 basis points on the 182-day bill (to 16.50%), and 1 basis point on the 364-day bill (to 18.84%).
The significant number of rejected bids reflects a clear misalignment between investor expectations and government yield objectives.
The government appears determined to cap yields to manage its interest costs, but this has created friction with market dynamics.
Financial analysts from Databank Research pointed to what they call a “policy rate disconnect.”
“The gap between the MPR and money market yields signals a short-term divergence intended to steer investor interest toward limited alternative assets,” they stated.
