'Rejected T-bills' to be retendered Tuesday
Ken Ofori-Atta — Minister of Finance

'Rejected T-bills' to be retendered Tuesday

The Ministry of Finance will today, Tuesday give banks and other investors a second chance to purchase treasury bills (T-bills) at a lower rate after their earlier offers on Friday were rejected for being too costly.

It is part of efforts to drive the benchmark rates down to 20 per cent from the current 35 per cent and above, a member of the auction team at the ministry told Graphic Online Tuesday.

Today's auction will cover last week's target, which was about GHS2.78 billion, but was declined by the government for being offered around 35 per cent.

Part of the funds to be raised is meant to meet maturing obligations of about GHS2.6 billion as well fund new projects.

The source prior to the auction on Friday, it was agreed that offers that will be more than 20 per cent will be rejected and the bills retendered for offers within the targeted rate.

Consequently, it said the government will be hoping to get offers for the auction around 20 per cent, above which it will have challenges accepting.

It is in line with a grand move to reset interest rates after a successful domestic debt exchange programme (DDEP) last month, the source said.

The government in February swapped about GH¢87 billion of costly short-term bonds for low cost long-terms ones to help make the public debt stock sustainable and in line with IMF requirements for support up to $3 billion.

The source said that action also successfully reset interest rates in the long-horizon, leaving the short-term ones untouched.

"Now, the fear is if we do not do anything about the short-term, a time will come when the government will also have challenges paying (the debts raised through the T-bill auctions) because 35 per cent is obviously unsustainable," the source said.

The decision to reject offers for T-bills around 35 per cent is the beginning, the source said.

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