Ghana’s recent treasury bill oversubscription reflects a reduced borrowing target rather than improving investor confidence, according to a leading market analyst who says celebrations would be premature and potentially misleading.
Nelson Cudjoe Kuagbedzi, Head of Finance at Merban Capital, explained that last week’s impressive 110 percent oversubscription resulted primarily from the government setting a much smaller fundraising goal after six consecutive weeks of undersubscription. The government sought just 2.8 billion Ghana cedis (GH¢) but received bids exceeding 6 billion cedis, ultimately accepting 5.7 billion cedis at the November 28, 2025 auction.
Speaking to JoyNews in an interview monitored by The High Street Journal, Kuagbedzi emphasized that the low target made the strong response less surprising than headline figures suggest. He described the oversubscription as a natural outcome when government demand falls well below normal levels, allowing investors to submit significantly more bids than required.
“It is clearly as a result of the lower target that the government set for the week,” he said. “Government, for the week, intended to raise about 2.8 billion Ghana Cedis, but the bids that were submitted were a little over 6 billion Ghana Cedis, and the government ended up accepting about 5.7 billion Ghana Cedis. And so, the oversubscription for this week is basically a result of the lower target that the government set.”
The finance expert noted that treasury bills function more as a refinancing platform for many institutional investors, particularly pension fund managers who face regulatory requirements preventing them from keeping funds idle. With limited short-term investment alternatives available in Ghana’s current market environment, these investors continue channeling money into 91-day bills regardless of prevailing interest rates or broader economic sentiment.
This structural dynamic means much of the participation stems from necessity rather than optimism about government creditworthiness or economic prospects. Pension funds and similar institutions must deploy their capital somewhere, and treasury bills remain among the few viable short-term options meeting regulatory requirements for safety and liquidity.
Kuagbedzi cautioned against interpreting one week’s auction results as evidence of restored investor confidence. He argued that investors rolling over maturing bills or temporarily parking funds will naturally continue participating in the market, whether or not they feel confident about Ghana’s economic trajectory or fiscal management.
“We cannot just rely on a single auction for today, and just draw the conclusion that investor confidence is actually going up,” he stressed. “The market will force you to conform. So definitely, banks will be forced to reduce their rates. They can’t do anything about it. If not, competition will kick you out.”
The warning comes as Ghana emerges from a prolonged period of treasury market weakness. The government recorded six straight weeks of undersubscription before last week’s result, with investors showing reluctance to absorb government debt at prevailing yields despite Ghana’s limited alternative financing sources.
Market data shows yields on the 91-day bill stood at 11.05 percent during the latest auction, down slightly from 11.13 percent the previous week. The 182-day bill yielded 12.43 percent, falling from 12.68 percent, while the 364-day bill cleared at 13.08 percent. These rates reflect the Bank of Ghana’s aggressive monetary easing cycle, which has seen the policy rate cut by 1,000 basis points during 2025.
The government plans to raise a substantially larger 5.8 billion cedis in its upcoming auction this week, presenting a more challenging test of market appetite. This higher borrowing target will provide clearer indication of whether the previous week’s oversubscription represents sustainable improvement or simply reflected opportunistic timing with an unusually low target.
Kuagbedzi recommended that government officials and market observers look beyond single auction results and instead focus on sustained trends, market depth, and investor behavior across multiple weeks before making declarations about restored confidence. He argued that drawing firm conclusions from isolated data points risks creating false impressions about underlying market conditions.
Treasury bills have become Ghana’s primary financing vehicle since the country lost access to international capital markets following sovereign credit rating downgrades. The government also faces limited domestic bond market activity after implementing a domestic debt exchange program in December 2022, making weekly treasury bill auctions critical for meeting short-term financing needs.
The finance analyst’s skeptical assessment contrasts with more optimistic interpretations some market participants offered following the oversubscription. Several observers had suggested the result indicated improving sentiment after weeks of concerning undersubscription that threatened the government’s ability to meet recurring expenditure obligations and refinance maturing debt.
Whether investor confidence is genuinely improving or the oversubscription merely reflected technical factors related to target setting will become clearer as upcoming auctions unfold. The substantially higher borrowing target for this week’s auction should reveal whether demand remains robust when the government seeks larger amounts more consistent with normal financing requirements.
Ghana’s fiscal operations depend heavily on consistent treasury bill demand, making auction performance a critical indicator of market confidence in government creditworthiness and economic management. Sustained oversubscription would signal restored trust, while continued volatility could indicate deeper structural challenges requiring policy intervention beyond simple target adjustments.
For now, Kuagbedzi’s analysis suggests last week’s positive result offers limited evidence that fundamental investor sentiment has shifted. He maintains that the impressive numbers stemmed primarily from technical factors rather than renewed faith in Ghana’s economic prospects or fiscal trajectory.