Government for the second week running failed to meet its Treasury bills sale target.

However, interest rates on the short term financial instruments remained steady, hovering around 14.08%.

The government mobilized a little above GH¢901 million cedis as against a target of GH¢1.01 billion. This means there was a shortfall of about GH¢109 million.

Though this under-subscription is better than that of the previous week, government will have to perhaps increase the interest rate slightly to attract more investors.

Investors appear to be more interested in the medium-term financial instruments as pricing is more attractive than the short-term instruments.

For the 3 months T-Bill, government accepted all the bids which was a little above GH¢806 million, whilst it accepted GH¢96.3 million cedis for the six months bills.

There was however no auctioning for the one year note.

Analysts still believe banks and retail investors may be hoping to close the year well as they hold more cash balances on their books.

Usually at this time of the year, many businesses want to record appreciable income, therefore refraining from engaging in business transactions that will take them into another financial year.

With the last auctioning of the short term securities expected to happen this Thursday [31st December 2020] which apparently is the last day of the year, government will be hoping to meet its target this time around.

Interest rate ease on short-end of market

Interest rate trends on the money market reflected mixed developments as
yields on the short to medium term instruments eased, but broadly tightened at the longer end, the Bank of Ghana said in its Monetary Policy Report.

On a year-on-year basis, the 91-day Treasury bill rate declined to about
14.1% in October 2020 from 14.7% a year ago.

Similarly, the interest rate on the 182-day instrument declined to 14.1%
from 15.1%.

With the exception of the 6-year bond, yields on the 7-year, 10-year, 15-
year, and 20-year bonds all increased.