Ethiopia’s T-Bill Market Draws Heavy Bids as Finance Ministry Reforms Gain Traction











Addis Ababa — Ethiopia’s Treasury-bill market is attracting record investor interest after a series of debt-market reforms, signaling a new phase of domestic borrowing that could reduce the country’s reliance on external lenders.

The Finance Ministry said it raised 111.1 billion birr ($1.9 billion) in the first two months of the 2025/26 fiscal year—exceeding a planned 103.4 billion birr—as bids surged to 164.7 billion birr, or roughly 1.6 times the amount on offer. The auctions left net new borrowing of 23.9 billion birr, about 14% of the government’s annual target of 172.9 billion birr, after maturing bills were refinanced.

Reforms Lure Broader Participation

The jump in demand follows the ministry’s rollout of a three-month issuance calendar, the first of its kind in Ethiopia. The schedule gives investors clear visibility on upcoming auctions, a move officials say is key to “resetting and relaunching” the domestic debt market.

“It’s the difference between walking into a market where the seller posts regular prices and one where you’re guessing every week,” said an Addis-based fixed-income analyst who asked not to be named. “Investors finally know when and what is coming, so they can plan.”

The government has also introduced fully electronic transactions and began listing six-month bills on the new Ethiopian Securities Exchange, while ending a long-standing requirement that commercial banks buy five-year bonds and halting direct central-bank advances.

Short Tenors in High Demand

Early auctions revealed a strong preference for shorter maturities. Bids for 28-day and 91-day paper were 6.8 times and 2.9 times supply, respectively, while one-year bills drew only 35% of the amount offered. That demand inversion briefly pushed six-month yields above those on one-year bills, a classic sign of market caution.

By the August 20 auction, demand had broadened across maturities as investors adjusted to the new calendar and higher yields on longer paper. Overall bid-to-cover rose to 2.1 times, and the one-year bill finally achieved near-full subscription.

Yields Adjust as Bidding Intensifies

Intense competition for short-term paper drove rates lower. The 28-day yield fell from 15.8% in early July to 13.8% by late August, while the 91-day rate slid from 17.8% to 14.4% and the 182-day yield from 19.0% to 14.9%. In contrast, the 364-day yield climbed to 17.5% as authorities sought to entice buyers into longer-term debt.

“This is what you want to see—yields reflecting actual demand,” said the analyst. “It shows that the market is starting to price risk rather than simply absorb whatever the government issues.”

Domestic Debt Landscape

Ethiopia’s total public-sector domestic debt stood at about 2.5 trillion birr ($42 billion) at the end of June. Long-term Treasury bonds account for roughly 80% of the total. For T-bills specifically, the Commercial Bank of Ethiopia holds about 45% of outstanding paper, pension funds 33%, other banks 14% and insurance companies 6%, ministry data show.

Building a Homegrown Investor Base

For Prime Minister Abiy Ahmed’s administration, a deeper local debt market is a strategic hedge against volatile foreign financing and a cushion for the country’s reform agenda. A more predictable, transparent T-bill market lowers rollover risk and creates a domestic savings vehicle for institutional investors.

Economists say the challenge now is sustaining investor appetite for longer maturities—critical for reducing refinancing pressure—while keeping borrowing costs in check.

“Ethiopia is laying the plumbing for a modern bond market,” said a regional economist in Nairobi. “If the reforms stick, the government will be able to finance more of its development program at home and on its own terms.”

With reporting from the Ministry of Finance’s August 2025 Domestic Debt Bulletin.