T-bills interest rates fall and new domestic bond exchange terms coming

Treasury bills (T-Bills) witnessed marginal drop as interest rates fall slightly and amended terms of domestic bond exchange to be published this week. How are investors getting ready and adjusting to the changes to come?

Results from the Bank of Ghana’s weekly treasury bills auction have shown a marginal drop from last week’s subscriptions.

The auction held on December 23, showed that the total subscription was GH¢2,015.85.

Even though this was more than the target of GH¢1,438 million, this was lower than what was achieved in the last auction.

The 91-day T-Bill recorded a drop of 0.64% to 34.93%, followed by the 182-day bill with a decline of 0.50% to 36.03%.

On the other hand, interest rates also dropped to 35.36% for the 91-day bill and 35.90% for the 182-day bill.

The 91-day bill accepted GH¢1,413.86 million whiles the 182-day bill accepted GH¢601.99 million.

The reduction in interest rates in the last few weeks has been attributed to the debt exchange programme and the announcement that treasury bills were exempted from the programme.

Also, a reduction in the interest rate will mean that the yields on the bills will be less.

The amended GH¢137.3 billion domestic bond exchange programme is expected to be published this week.

The amended terms would be set forth fully in an Amended and Restated Exchange Memorandum, a statement issued by the Finance Ministry dated December 24, 2022 said.

As part of efforts by the government to restructure the debt programme, individual investors have been included.

Individual bondholders were originally exempted from the domestic debt exchange, however, after government excluded pension funds following pressure from organised labour, the programme is expanded to cover individual investments.

In addition to the modifications, there would be eight new instruments to the composition of the new bonds, for a total of 12 new bonds, one maturing each year starting January 2027 and ending January 2038.

The government is also setting a non-binding target minimum level of overall participation of 80 per cent of aggregate principal amount outstanding of eligible bonds among others.