Fitch predicts a fall in T-bill yields

Fitch Ratings anticipates a decline in treasury bill yields for Ghana in 2024 as the government advances with external debt restructuring amid economic recovery.

Despite this, T-bill yields are expected to remain high compared to historical standards, reflecting ongoing inflation challenges and economic fundamentals that are not yet robust, the UK-based agency said.

“We still expect treasury bill yields to remain high by historical standards”, it noted.

Despite a 2.0 percentage point easing since January 2024, T-bill yields are expected to maintain their relatively high levels.

In its latest assessment of the Ghanaian economy, Fitch also highlighted the strong profitability of banks in Ghana, noting that they will complement capital-raising initiatives encouraged by the Bank of Ghana.

“We expect several banks to raise core capital from shareholders and to seek capital support from Ghana Financial Stability Fund”, it added.

The central bank directed undercapitalised banks to present credible recapitalisation plans in the previous year.

Fitch expects several banks to raise core capital from shareholders and to seek support from the Ghana Financial Stability Fund, to which the government and the World Bank's International Development Association have committed $500 million and $250 million respectively.

Foreign-owned banks are viewed as better positioned to navigate Ghana's challenging operating environment, as they can leverage support from their large shareholders, Fitch noted.

Last week's T-bill auction witnessed increased investor participation, attributed in part to improved liquidity levels resulting from coupon payments on new bonds.

Investors submitted total bids valued at GH¢6.97 billion against an auction target of GH¢6.29 billion, all of which were accepted by the treasury.

Yields saw a significant decline compared to recent auctions, with the 91-day yield dropping by 61 basis points to 27.28%, and the 182 and 364-day yields decreasing by 65 and 60 basis points to 29.75% and 30.30%, respectively.