Investor appetite for Government of Ghana treasury bills has rebounded sharply over the past two weeks, reversing a stretch of weak auctions that had raised concerns over the state’s short-term financing programme and the sustainability of declining yields in the domestic debt market.
The latest auction results released by the Bank of Ghana show that the May 8 and May 15, 2026 auctions were both oversubscribed, marking a turnaround from the under-subscriptions and sizeable bid rejections that characterized much of April.
According to auction data, the May 8 sale recorded total bids of nearly GH¢7.8 billion against a target of about GH¢4.3 billion, representing an oversubscription of roughly 80 percent. The 91-day bill dominated demand with GH¢5.72 billion in bids, of which GH¢4.37 billion was accepted. The 182-day bill attracted GH¢650 million in bids, with GH¢ 570 million accepted, while the 364-day bill received GH¢1.46 billion worth of bids, out of which GH¢1.14 billion was taken up.
The subsequent May 15 auction sustained the renewed momentum, with investors continuing to pile into the short end of the yield curve despite moderating interest rates. The total amount tendered was GH¢5.80 billion against a target of GH¢4.30 billion resulting in a 34.8 percent oversubscription, with the government accepting GH¢5.48 billion worth of bids. For 91 day bills GH¢3.83 billion was tendered and GHc3.65 billion was accepted. For 182 day bills, GH¢709.83 million was tendered and GH¢671.72 million was accepted. For 364 day bills, GH¢1.26 billion was tendered, and GH¢1.15 billion was accepted.
Analysts say the reversal reflects a combination of improving macroeconomic sentiment, excess banking sector liquidity and rising caution among institutional investors regarding longer-dated government securities being traded on the Ghana Fixed Income Market’s secondary market
“The market is gradually regaining confidence in government paper after the uncertainty created by the domestic debt restructuring exercise,” said a fixed income dealer at a leading Accra-based investment bank. “Most investors are still unwilling to lock funds into long-dated bonds, so treasury bills remain the preferred safe haven.”
The dominance of the 91-day instrument remains striking. In both recent auctions, the shortest tenor accounted for well over 70 percent of total bids submitted. Analysts attribute this preference to lingering investor caution after the Domestic Debt Exchange Programme (DDEP), under which holders of medium and long-term bonds suffered maturity extensions and coupon reductions.
Although treasury bills were exempted from the DDEP, investors remain wary of duration risk and prefer instruments that mature quickly and can be rolled over frequently.
“The preference for the short end is rational,” noted an Accra-based treasury manager at the weekend. “Investors want liquidity, flexibility and minimal exposure to future policy uncertainty. The 91-day bill offers all three.”
The behaviour of investors also reflects expectations that interest rates may continue to decline over the coming months as inflation moderates and fiscal conditions improve.
Recent auction data show yields stabilising at much lower levels than those prevailing earlier in the year.
The rally in Treasury bill demand follows Ghana’s improving macroeconomic outlook under the International Monetary Fund-supported reform programme that the country exited last week. The recent upgrade of Ghana’s sovereign credit rating by Fitch Ratings to B with a positive outlook has further boosted investor confidence in government securities.
Finance Minister Cassiel Ato Forson has repeatedly argued that the government’s fiscal consolidation programme is beginning to yield results, citing stronger revenue mobilisation, declining inflation and improved exchange rate stability.
At the same time, liquidity conditions within the banking sector remain elevated. Many banks and institutional investors have accumulated sizeable cedi balances amid relatively weak private sector credit demand, forcing them back into government securities despite lower yields.
This excess liquidity partly explains why government has increasingly been able to reject bids aggressively in recent months while still meeting its financing requirements. Between January and April 2026, government reportedly mobilised about GH¢120.2 billion from the treasury bill market against bids worth more than GH¢181 billion submitted by investors.
Indeed, some analysts argue that the earlier under-subscriptions witnessed in April were not entirely demand-driven but also reflected strategic bid rejections by the Treasury as it sought to force yields lower.
“The government deliberately became selective about the rates it was willing to accept,” says one market analyst. “That initially discouraged some investors, but the market has now adjusted to the new yield environment.”
The current structure of demand also highlights persistent segmentation within Ghana’s domestic debt market. While treasury bills continue attracting strong interest, appetite for medium and long-term bonds remains subdued, forcing government to rely heavily on short-term borrowing.
That strategy carries refinancing risks because large volumes of debt mature every few months. However, analysts say the Treasury currently prefers the flexibility of short-term financing while waiting for confidence in the long end of the market to recover.
Over the next two to three months, market watchers expect treasury bill issuance volumes to remain elevated as government continues refinancing maturing obligations and funding budget operations. However, most analysts forecast that oversubscriptions are likely to persist, especially for the 91-day tenor.
Short-term rates could trend gradually lower if inflation continues easing and the cedi remains relatively stable, although neither of those are a given, due to the global price shocks currently being experienced by Ghana that are emanating from unresolved tensions in the Persian Gulf.
Current market expectations suggest the 91-day bill’s yield could possibly decline modestly over the next couple of months, while the 182-day and 364-day instruments may remain relatively sticky because investors will continue demanding a premium for longer maturities.
The outlook will nevertheless depend heavily on fiscal discipline by government and monetary policy decisions by the Bank of Ghana. Any renewed exchange rate pressure, acceleration in inflation or deterioration in government financing conditions could quickly reverse the recent decline in yields.
For now, however, Ghana’s treasury bill market appears to have regained momentum after several uncertain weeks, offering government a critical source of domestic financing having exited its three-year IMF programme.
By: Toma Imirhe / businesspostonline
