Last week saw a dip in trading activity on the new Government of Ghana (GoG) bonds, as aggregate volume traded retreated by 21.09% week-on-week to ¢119.05 million. This decrease in trading volume came after the completion of the Domestic Debt Exchange Programme, which may have contributed to a reduction in investor interest in the new bonds.
Moreover, the fact that the new bonds constituted only 34% of the market turnover points to a lack of demand for these securities. The low demand may be attributed to investor caution or a lack of confidence in the new bonds, given the uncertain economic conditions in Ghana and the wider African region.
It is worth noting that only the 2027-2030 maturities were traded for the new bonds, leading to a compression of the front end of the yield curve by 90 basis points. This suggests that investors may be gravitating towards longer-dated securities, possibly in anticipation of a prolonged period of low interest rates.
Looking ahead, analysts believe that the new GoG bonds will continue to trade at par levels this week, with little activity expected on the market. However, they suggest that bond prices may increase soon, as interest rates are expected to fall. This could boost market activity and encourage investors to take a closer look at the new bonds.
Despite the current sluggishness in trading activity, Ghana’s bond market has shown resilience in recent years, with increased investor interest in the country’s debt securities. In 2020, Ghana raised a total of $3 billion in its Eurobond issuance, which was oversubscribed
