The Akufo Addo led government may soon encounter challenges in refinancing Treasury bills that are due for maturity starting October 2022.
Due to the expected domestic debt restructuring, refinancing options on October 3, 2022, may put the government in a tight corner, says the Weekly Fixed Income Update by Databank Research.
The research pointed out that the government may have to supplement any refinancing offer with support from the Bank of Ghana in order to get more satisfactory refinancing options.
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The Akufo Addo’s government is expected to offer ¢905 million across the 91-day to 182-day bills to refinance total maturities worth ¢786.6 million.
For the first time in 15 weeks, the Bank of Ghana Treasury auction target declined during last week (23 September, 2022.
The shortfall in uptake was mainly attributed to subdued bids, with total bids submitted constituting 89.59% of the auction target.
The weighted average yields of T-bills currently stand at 30.18% for the 91-day, 31.34% for the 182-day and 30.47% for the 364-day tenors.
Meanwhile, on the bond market, investors will maintain interest in near-term maturities in the secondary market.
Investors are expected to focus on T-bills in the primary market. They may also be on the lookout for a bond offering to refinance the maturing paper on October 3, 22.
Last week, Fitch Ratings downgraded Ghana’s Issuer Default Rating from ‘CCC’ to ‘CC’.
The rating cited conceivable debt restructuring, high debt service, and constrained financing as reasons for the recent downgrade.
This is expected to complicate the refinancing options of the Treasury on the maturing paper on October 3, 2022 as pricing for a refinancing offer will likely be unfavourable.
Meanwhile, President Akufo Addo when addressing the United Nations General Assembly last week described the downgrading ratings by Fitch and others as ‘partiality’ against his government.
