Investors begin ditching TBills as rates hit low levels

Investors have begun ditching treasury bills and now exploring other investment instruments in the country over the continuous significant decline in TBill rates in the country.

The Treasury Bill rates for the 91 and 182 days started 2016 at 22 and 23 percent respectively.

But the figures however reduced to 18 percent by the end of December last year.

Figures from the Bank of Ghana (BoG) as at Wednesday morning (January 4, 2017) showed the rate for 91 day TBill has dropped further to 16.7 percent while that of 182 days stood at 17.91 percent.

Explaining the reasons accounting for the drop, the Director and Head of Market at Barclays bank Ghana, Kobla Nyaletey told Citi Business News the decline can largely be attributed to the drop in inflation as well as the increase in liquid cash for most banks for the period.

“Inflation has dropped from about 19 to 15.5 percent and so naturally when inflation begins to decline, we should see interest rates also move down so that is the movement that we have began to see. Indeed the 91 day T-Bill declined quite significantly but all other interest rates in the market have also been on the declining path over the past few weeks and months,” he stated.

Mr. Nyaletey added, “Typically in the 4th quarter in particular, the mass liquidity improves on the back of the commencement of the cocoa season. As a result, liquidity in the banking sector has been very robust over the past few months and that is also being driven by banks pushing this liquidity into government paper.”

Moreover, the relative slow pace in the growth of credit has compelled banks to consider government instruments which equally have forced interest rates to drop.

Meanwhile Kobla Nyaletey like other market observers in the fixed income market, has intimated to Citi Business News the trend is likely to run through the year.

Treasury bills are nonetheless, one of the most patronized investment instruments by most investors in Ghana.

By: Vivian Kai Lokko/citibusinessnews.com/Ghana

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