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Ghanaians oversubscribe T-bills by 30% as government generates GH¢2.53bn

The latest Bank of Ghana report has revealed that T-bills have been oversubscribed by almost 30% as the government sought for more funds for its short-term responsibilities.

Bank of Ghana

According to the BoG, the treasury market has seen rising interest rates for the fourth consecutive week.

The 91-day T-bill rose by 0.07% to 19.96%, while the 182-day bill increased by 0.10% to 22.57%.

The one-year bill also rose to 27.26% from the previous week’s 26.90%.

Meanwhile, the recent analysis of the Domestic Debt Restructuring in Ghana has revealed that the country’s 23 banks will incur substantial losses due to a reduced coupon rate and an extension of the maturity period from five to 15 years.

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This report, compiled by Dr. Richmond Atuahene and K B Frimpong, outlines that the banks will collectively lose an additional ¢6.1 billion due to these changes, this is after an initial loss of GHS 10bn in liquidity in 2022 alone.

Prior to the implementation of the Domestic Debt Exchange Programme (DDEP), the 23 banks would have generated a positive cash flow of approximately ¢10.1 billion over the period, based on the original coupon rate of 19.3% per annum.

However, the extension of the maturity period and the reduction of the coupon rate will impact heavily on their earnings from investments in Government of Ghana Bonds, resulting in a liquidity gap of approximately 10.3%. If the average customer deposit rate was around 10% per annum, but later declined to a weighted average rate of 9% per annum, this liquidity gap is expected to worsen.

For instance, Bank A with a bond value of ¢9,106,452,000 and an average coupon rate of 19.3% would have had cash flow of ¢1,821,290,000, but with the Domestic Debt Exchange Programme, the effective rate of 9% per annum will cause a drop in cash flow to ¢720,927,000, thus leading to liquidity gap of ¢1,100,363,000.

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