Ghana’s bond market is expected to see a recovery as the macro economy gradually improves.
The government’s continued servicing of both new and old papers is anticipated to contribute to this recovery. However, it is projected that the recovery will not bring the market back to pre-Domestic Debt Exchange Programme (DDEP) levels as investors are showing a strong interest in T-bills.
An increase in corporate issuance is also expected as yields exit the 30% territory. Corporate entities are predicted to raise funds on the fixed-income market, especially as the regulator works on operationalizing the commercial paper market for shorter-dated securities.
Databank Research has projected that improving liquidity levels in the money market and yield expectations will create favorable conditions for corporate issuance in 2024. This is expected to present competitive opportunities to investors seeking to diversify their investment portfolios from longer-dated Government of Ghana securities.
In 2023, the secondary bond market showed signs of recovery following the DDEP. Although there was a slight upturn in turnover, investor appetite favored shorter-dated securities. Most of the market’s activity constituted bond exchanges and repos by banks aiming to manage liquidity.
Ghana successfully completed the first phase of the Domestic Debt Exchange Program in the first quarter of 2023, exchanging GH¢82.99bn old bonds for new ones with an 85% success rate. The second phase in the third quarter of 2023 also saw a high participation rate for restructuring US dollar-denominated domestic bonds and Cocoa bills.
Overall, the bond market is expected to see positive developments as the economy continues to progress, paving the way for increased investor interest and corporate issuance.
