Treasury yields eases as cedi stabilizes

In the awake of the cedi gaining stability against the major trading currencies especially the United State dollars, yields on government’s treasuries have begun to soften.

This has been on the expectation of the market that the current recovery and follow-up stability of the local currency will lead to lower inflation going forward. This is in spite of the current inflation recorded for March 2019 at 9.3 percent, which has largely been due to the depreciation of cedi and hikes in pump fuel prices.

The yield on the 91-day bill softened by 2 basis point to 14.71 percent last week against 14.73 percent in the first week of April. The 182-day bill also dropped to 15.12 percent in the second week compared with 15.16 percent in the first week. However, the 1 year and 2-year notes remained unchanged during the month of April.

The 91-day bill and 182-day bill started the year at 14.60 percent and 15.04 percent, respectively.

Government’s Debt Issuance

In the second quarter of 2019, government plans of raising a total GHc 12,100 million from the domestic market, representing a 19.2 percentage point’s increase from the amount targeted in the first quarter of GHc 11,250 million.

Government expects to raise GHc 4,300 percent in the form of 91-day treasury bills. Of this amount, GHc1, 400 million will be issued in April, the same amount in May and GHc1, 500 million in June.

The issuance of 182 day bills will amount to GHc2, 900 million comprising GHc 900 million in April, GHc 950 million in May and GHc1, 050 million in June.

For 364 day treasury notes, which has replaced the erstwhile one year notes, GHc 250 million will be issued in April, GHc 250 million in May and GHc 250 million in June.

Two year bond issuances, open to foreign investors as well as local investors will be issued to the tune of GHc 600 million in April only.

Last week, government raised a total of 970.95 million, which was above the target of GHS579.00 million for the week, emanating from increasing investor confidence.

Government is expected to increase borrowing in 2019 to fund a higher fiscal deficit target of 4.2 percent, up from 3.7 percent in 2018, enabling it to increase spending in 2019 to ramp up infrastructure development and increase funding to flagship programs.

By Joshua W. Amlanu