Treasury Bill Rates Continue to Decline Amid Weak Demand and Inflation Moderation
Treasury bill (T-Bill) rates have continued to decline in recent weeks, driven by weak investor demand and easing inflation pressures. This trend has led to persistent yield compression across the T-bill curve, with analysts expecting further downward pressure on rates in the coming weeks.
In June, inflation moderated to 13.7 percent, signaling a positive shift in economic conditions. The government is also looking to issue longer-dated bonds, which could further impact the T-bill market. Analysts predict that this move may result in more undersubscription and even lower rates for T-bills.
Despite increasing its offer, the Treasury managed to raise GH¢2.96 billion from the latest auction, falling slightly short of its GH¢3.36 billion target. However, the funds raised were sufficient to cover the GH¢2.24 billion in maturing bills. Investors participated in 88 percent of the target and took up 132 percent of the amount due for rollover.
Yields across the T-bill curve have continued to decrease. The 91-day bill fell by 13 basis points (bps) week-on-week (W/W) to 14.57 percent, while the 182-day bill dropped 23 bps to 15.02 percent. The 364-day bill saw a significant drop of 49 bps, settling at 15.17 percent. This marks the third consecutive week of declines, aligning with market expectations of lower inflation and a shift in investor preferences toward higher-yielding instruments.
“Investors appear to be reallocating toward other competitive yield securities, especially in the bond market where sentiment has picked up,” noted Databank in its report to investors.
The Ministry of Finance is targeting a GH¢7.53 billion raise from this week’s T-bill auction, scheduled for Friday, July 11, to refinance GH¢7.26 billion in maturing bills. However, market watchers are uncertain about whether demand will improve, particularly with the government reportedly preparing to issue longer-term bonds as part of a broader debt management strategy.
Analysts suggest that the Treasury’s timing aligns with an attempt to lock in relatively low yields for longer maturities, ahead of expected refinancing needs.
“There is a clear strategy at play here, locking in financing at cost-effective levels while inflation expectations are anchored,” Databank stated.
Secondary Bond Market Shows Signs of Recovery
Activity in the secondary bond market has shown signs of recovery after a previous slowdown. Total traded volume rose 3.88 percent week-on-week to GH¢1.21 billion as investors sought opportunities in longer-dated bonds. The Feb 2027 bond, with a coupon of 8.35 percent, led activity and accounted for 40 percent of total trades at a weighted average yield of 19.54 percent.
Trades in the 2027-2030 segment comprised 49 percent of activity and cleared at an average yield of 19.94 percent, while bonds maturing between 2031 and 2038 represented 51 percent of the market, with a weighted average yield of 19.62 percent.
Improved market sentiment was supported by the recent approval of a US$300 million World Bank Development Policy Operation and the government’s successful servicing of its second post-restructuring Eurobond coupon of US$349.52 million. The combination of multilateral inflows and external debt service performance has helped boost investor confidence in the domestic debt markets.
“There is renewed appetite for duration, particularly among institutional investors who see stability in the macro backdrop. The IMF’s expected disbursement of $370 million will likely provide further support,” analysts at Databank said.
Market Recovery and Institutional Investor Interest
Although trading in older bonds remains limited, the rebound in first-half 2025 has been notable. Bond market volumes surged to GH¢24.01 billion from GH¢19.35 billion over the same period in 2024, pointing to a recovery in market confidence following the Domestic Debt Exchange Programme (DDEP).
The August 2027 bond (10 percent coupon) stood out as the most actively traded security in the first half, representing 16 percent of overall volume and pricing at an average rate of 20.62 percent.
This recovery highlights a growing interest from institutional investors, who are seeking stable returns amid a favorable macroeconomic environment. With ongoing support from international financial institutions and improved debt management strategies, the local debt market is showing signs of resilience and potential for future growth.