Government Exceeds Treasury Bill Target in Recent Auction

In a significant development for Ghana’s financial markets, the government successfully raised GH¢8.99 billion through its latest treasury bill (T-bill) auction, significantly surpassing its target of GH¢6.415 billion. This strong performance, revealed in official data from the Bank of Ghana (BoG), indicates robust investor appetite for short-term government debt and provides critical insights into the country’s fiscal and monetary landscape. The auction, designated as Tender 1994 and settled on February 13, 2026, saw total bids amounting to GH¢22.67 billion across the 91-day, 182-day, and 364-day tenors, resulting in an oversubscription rate of approximately 141%.

This comprehensive analysis delves into the details of the auction, explains the mechanics of treasury bills, examines the potential reasons behind the heavy oversubscription, and offers practical guidance for investors monitoring Ghana’s fixed-income market.

Key Points of the Auction Result

The most salient facts from Tender 1994 are summarized below. These figures are directly sourced from the Bank of Ghana’s official auction results.

• Amount Raised: GH¢8.99 billion was accepted from bids.
• Target Amount: The government’s announced objective was GH¢6.415 billion.
• Total Bids Received: GH¢22.67 billion.
• Subscription Rate: Approximately 141% (calculated as (Total Bids / Target) * 100). This high rate signifies that demand far exceeded the supply of securities.
• Tenors Offered: 91-day, 182-day, and 364-day treasury bills.
• Allocation Method: Bids were allocated on a partial basis, meaning not all submitted bids were accepted in full.
• Issue Date: Successful securities were issued on February 16, 2026.
• Next Auction Target: For Tender 1995, scheduled for the week following this publication, the government has set a target of GH¢9.322 billion.

Detailed Interest Rates (Discount Yields)

The weighted average discount rates, which determine the investor’s yield, were as follows for each tenor:

• 91-Day T-bill: 8.4281% (equivalent to an annualized interest rate of ~8.6095%).
• 182-Day T-bill: 10.1376%.
• 364-Day T-bill: 9.9602%.

The Bank of Ghana noted that the range of accepted discount rates varied from a low of 7.8431% to a high of 11.60%, depending on the specific tenor and bid competitiveness.

Background: Understanding Treasury Bills in Ghana

To fully grasp the significance of this auction result, it is essential to understand what treasury bills are and their role in the economy.

What Are Treasury Bills?

Treasury bills (T-bills) are short-term debt instruments issued by a government to finance its short-term fiscal needs. They are considered one of the safest investments because they are backed by the full faith and credit of the issuing government. In Ghana, T-bills are issued by the Bank of Ghana on behalf of the government, with maturities typically of 91 days (3 months), 182 days (6 months), and 364 days (1 year).

How Do They Work?

T-bills are sold at a discount to their face value. An investor purchases a bill for less than its nominal (par) value and receives the full face value at maturity. The difference between the purchase price and the face value is the interest earned, known as the discount yield. For example, a 91-day T-bill with a face value of GH¢100 might be purchased for GH¢98. The investor receives GH¢100 at maturity, earning a GH¢2 return over 91 days.

The Auction Process

The Bank of Ghana conducts weekly auctions via a tendering system. Authorized dealers (primary dealers) and other institutional investors submit competitive and non-competitive bids.

• Competitive Bids: Specify the discount rate (yield) the bidder is willing to accept. Bids are ranked from the lowest discount rate (highest price) upwards until the government’s target amount is met. Bids at rates too high (yields too low) may not be fully allocated.
• Non-Competitive Bids: Allow smaller investors to participate without specifying a rate. They accept the weighted average discount rate determined by the competitive bids and are guaranteed allocation up to a set limit.

The “partial allocation” mentioned in the BoG release is standard practice when total bids exceed the target, a situation known as oversubscription.

Why Does the Government Issue T-bills?

The primary purpose is to raise short-term funds to manage cash flow, finance budget deficits, and refinance maturing debt. For the central bank, T-bill auctions are a key tool for implementing monetary policy. By managing the supply of T-bills and the rates at which they are issued, the Bank of Ghana influences liquidity in the banking system and helps steer inflation towards its target.

Analysis: Implications of the Oversubscription

The GH¢8.99 billion raised represents a 40% exceedance of the target (GH¢8.99B – GH¢6.415B = GH¢2.575B). A subscription rate of 141% is notably strong. This outcome can be analyzed from multiple perspectives.

1. Signal of Market Liquidity and Investor Confidence

The massive GH¢22.67 billion in total bids suggests substantial liquidity is parked within the financial system—likely with commercial banks, pension funds, insurance companies, and mutual funds. These institutions, seeking safe and relatively short-term placements, aggressively bid for government securities. This can be interpreted as a vote of confidence in the government’s ability to honor its debt, even amidst broader economic challenges. It also indicates that, at the offered rates, T-bills remain an attractive proposition compared to other short-term assets.

2. The Yield Curve and Rate Expectations

The auction results produce a specific yield curve for Ghanaian T-bills:

• 91-day: ~8.61%
• 182-day: ~10.14%
• 364-day: ~9.96%

An interesting observation is that the 182-day yield (10.14%) is higher than the 364-day yield (9.96%), creating a slight “hump” or inversion in the short-end of the curve. This can occur due to specific supply-demand dynamics for each tenor, market expectations of future rate cuts, or technical factors in the bidding process. Typically, longer tenors offer higher yields to compensate for interest rate risk and inflation uncertainty. The 364-day rate being lower than the 182-day may suggest investors expect lower policy rates in the medium term or have a strong preference for locking in funds for a full year at a competitive rate.

3. Government Financing and Fiscal Pressure

While oversubscription is positive for the government’s immediate borrowing ease (it can raise more funds easily), the sheer volume of GH¢22.67 billion in bids against a GH¢6.415 billion target highlights the scale of financing required. The government’s decision to accept GH¢8.99 billion—well above target but below total bids—shows a measured approach to avoid excessive short-term debt accumulation. However, consistently high borrowing needs can crowd out private sector lending and contribute to future debt sustainability concerns if not matched by robust economic growth.

4. Inflation and Monetary Policy Context

T-bill yields are a critical benchmark for the entire economy, influencing lending rates, deposit rates, and the cost of corporate bonds. The auction results, particularly the weighted averages, must be viewed against Ghana’s current inflation trajectory. If inflation is trending downward (as has been the case with the Bank of Ghana’s tight monetary policy), real returns (yield minus inflation) become more attractive, fueling demand. The central bank will monitor these auction rates closely as an indicator of market rate expectations and the effectiveness of its policy stance. The upcoming target of GH¢9.322 billion for the next auction suggests the government’s financing needs remain substantial.

5. Comparison with Previous Auctions

Without explicit historical data from the article, a general observation is that a 141% subscription is on the higher end of typical ranges. It suggests a particularly strong week for liquidity or a perceived value in the rates set by the central bank. Tracking the trend in subscription rates and average yields over several weeks is more informative than a single data point. A sustained pattern of high oversubscription with stable or falling yields could indicate successful monetary policy anchoring.

Practical Advice for Investors and Market Watchers

For retail investors, financial institutions, and analysts, this auction result offers several actionable insights.

For Potential Investors in Upcoming Auctions

• Monitor the Announced Target: The government’s target (e.g., GH¢9.322 billion for Tender 1995) sets the expected supply. A lower target relative to strong demand can lead to even fiercer competition and potentially lower accepted yields.
• Understand Your Bid Strategy: If you are a competitive bidder, submitting a rate too low (too aggressive) risks