Bank of Ghana Said to Suspend 14-Day Bills, Replace With 56-Day

Accra, Ghana, Capital Markets in Africa — Ghana’s central bank will suspend the weekly auction of 14-day bills after demand surged to a record for the fixed-rate securities and reduced appetite for benchmark notes the government sells to finance operations, according to a person familiar with the plans.

The Accra-based Bank of Ghana will offer 56-day bills instead, according to the person, who asked not to be identified because the information isn’t public yet. The new auction will be competitive and allow the bank to reject bids, the person said. The bank was obligated to accept all bids on 14-day notes, which were used to manage liquidity, the person said.

Ghana has turned to international markets in the past year to raise money to help refinance its domestic securities, which has one of the highest yields in sub-Saharan Africa. While the efforts have helped lower borrowing costs, it’s been slower than past IMF programs because of stubborn inflation and a crash in commodity prices, including oil, cocoa and gold, Ghana’s three biggest exports.

The bank sold a record 1.8 billion cedis ($455 million) worth of 14-day bills at the last auction on Jan. 20. The yield on the bill is fixed at the monetary policy rate, currently at 26 percent. That compares with the government’s 91-day bill rate at 22.646 percent.

The demand for 14-day bills during the last auction cannot be completely attributed to excess liquidity in the system because some of the lenders are still having liquidity problems, the person said. Some banks took advantage of the high fixed rate the 14-day bill offered, which threatened to disrupt government finances, the person said.