Bond market turnover surges over 450% as new government bonds begin trading
The bond market in Ghana has experienced a significant increase in trading activity, with total turnover surging by an impressive 453.25% to reach ¢750.36 million. This development comes as trading of new government bonds began on the market. The new bonds were met with a positive response from investors, as the aggregate traded volume for these securities stood at ¢44.47 million.
In the opening days of trading, the market saw little activity, but toward the end of the week, there was an uptick in trading volumes. However, the market also witnessed some limited offers with no bids to match.
While the surge in trading activity is certainly encouraging, analysts are cautioning that the market is likely to see limited activity in the coming weeks as investors seek clarity on the valuation of the new Government of Ghana bonds. This is due to the inclusion of a payment-in-kind component in the coupons, which is causing some uncertainty among market participants.
Despite these concerns, the Ministry of Finance has expressed its commitment to ensuring that payments of coupons and principals of the old bonds resume by March 13, 2023. In a statement released on February 27, 2023, the Ministry indicated that the newly issued bonds have been settled and listed and will become the new benchmark bonds for the fixed income market.
“The Ministry of Finance will work with relevant stakeholders, as agreed, to ensure that these new benchmark securities become the basis for deepening the domestic sovereign debt market,” the statement read.
This commitment from the Ministry of Finance is likely to be well received by investors, who are keen to see a stable and predictable market. The development of a deep and liquid bond market is essential for the continued growth and development of Ghana’s economy, as it will provide a reliable source of financing for both public and private sector projects.
In recent years, the government has taken steps to develop the bond market, including the introduction of a new electronic trading platform and the issuance of longer-dated bonds. These efforts have been successful in attracting both local and international investors to the market.
Looking ahead, it will be important for the government and other stakeholders to continue to support the development of the bond market by promoting transparency, providing clear guidelines for issuers, and ensuring that investors have access to timely and accurate information. By doing so, Ghana’s bond market has the potential to become a key source of financing for the country’s economic development.
