- DDEP Bond Trading Surges as Ghana’s Fixed-Income Investors Rotate Out of Treasury Bills
Trading on Ghana’s fixed-income market slipped modestly in the week ending October 2, but the headline decline concealed a significant reallocation of investor capital from short-dated Treasury bills into restructured government bonds.
Total market turnover reached GH¢6.82bn, down 1.72 per cent from GH¢6.94bn in the previous week, according to the Ghana Fixed Income Market’s weekly trading report.
The small movement in aggregate activity might ordinarily suggest an uneventful week. Yet beneath the surface, the market underwent a pronounced change in composition: trading in Treasury bills dropped by nearly GH¢1.19bn, while activity in Domestic Debt Exchange Programme bonds increased by about GH¢1.21bn.
That near-perfect offset is the clearest indication that investors were not simply withdrawing from government securities. They were repositioning along the maturity curve.
Treasury bills remained the market’s largest segment, accounting for GH¢3.64bn, or approximately 53.3 per cent of total turnover. However, trading was 24.61 per cent lower than the GH¢4.83bn recorded in the preceding week.
By contrast, DDEP bond turnover climbed 77.67 per cent to GH¢2.76bn from GH¢1.55bn. The restructured securities consequently accounted for 40.5 per cent of all activity, compared with roughly 22.4 per cent a week earlier.
Together, Treasury bills and DDEP bonds represented almost 94 per cent of total turnover, reinforcing the government’s overwhelming dominance of Ghana’s fixed-income market.
The movement may represent the early stages of a duration trade. With the Bank of Ghana maintaining its monetary policy rate at 14 per cent, investors expecting inflation and interest rates to remain broadly contained may be prepared to move beyond short-term bills in search of capital gains and more attractive longer-term returns.
However, the yield movements were too uneven to support the conclusion that the entire bond market was rallying.
The February 2028 and February 2029 DDEP bond yields each increased by 32 basis points to 12.44 per cent and 13.81 per cent, respectively. The February 2030 bond yield rose even more sharply, gaining 42 basis points to 14.23 per cent.
Rising yields imply falling bond prices, suggesting that the surge in trading around parts of the curve was accompanied by selling pressure or a demand for greater compensation for maturity risk.
At the longer end, conditions were different. The February 2035 bond yield declined by 44 basis points to 14.36 per cent, while the February 2037 yield dropped 58 basis points to 14.92 per cent. The February 2038 security also recorded a 23-basis-point decline to 14.93 per cent.
The result was not a straightforward rally, but a fragmented market in which investors appeared willing to acquire selected longer-dated securities while repricing some medium-term bonds more cautiously.
Trading was also highly concentrated.
The February 2029 DDEP bond recorded turnover of about GH¢1.48bn, compared with GH¢113.53mn in the previous week. That single security represented approximately 53.4 per cent of all DDEP bond turnover and more than one-fifth of activity across the entire fixed-income market.
The February 2032 bond followed with GH¢456.61m, while the February 2028 and February 2031 securities recorded GH¢223.91m and GH¢213.71m, respectively.
This concentration complicates the interpretation of the week’s numbers. The increase in DDEP trading may reflect a broad revival in appetite for restructured government debt, but it could also have been heavily influenced by a small number of large institutional transactions.
In a market where liquidity is uneven, one or two block trades can materially alter weekly turnover and quoted yields without necessarily indicating a lasting change in investor sentiment.
The more revealing measure may be outright market activity excluding sell-and-buy-back transactions. On that basis, turnover was about GH¢6.41bn in both weeks, meaning the cash market was effectively unchanged.
The reported 1.72 per cent decline in overall turnover was therefore largely attributable to weaker activity in sell-and-buy-back transactions, which fell 22.3 per cent to GH¢411.88m.
This suggests that the market did not shrink materially. Instead, its internal allocation changed.
The contrast between DDEP securities and newly issued government bonds was especially striking.
Turnover in new government bonds plunged 78.63 per cent to just GH¢1.17m. Trading in the September 2030 bond amounted to GH¢1.12m, while the March 2033 bond recorded only GH¢50,000.
These are exceptionally small amounts relative to the size of the market. They also raise questions about the reliability of yield signals derived from thinly traded instruments.
The September 2030 new bond yield declined by 25 basis points to 11.80 per cent. In contrast, the March 2033 bond yield increased by 43 basis points to 12.60 per cent. But with so little underlying turnover, those changes may reflect isolated transactions rather than a deep, continuously priced market.
The persistence of weak liquidity in newer securities could complicate the government’s efforts to rebuild a conventional domestic yield curve following the debt exchange. A functioning benchmark curve requires regular issuance, active two-way trading and sufficient participation to produce credible pricing across different maturities.
Corporate securities remained peripheral.
Turnover dropped 62.21 per cent to GH¢9.53m from GH¢25.22m, leaving corporate debt with only about 0.14 per cent of total market activity.
That imbalance underscores one of the structural weaknesses in Ghana’s financial system: although the country has a formal fixed-income platform, it continues to operate primarily as a marketplace for government liabilities.
Companies remain dependent on bank lending, retained earnings or private placements because the public corporate bond market has yet to become a meaningful source of financing. This limits funding alternatives for businesses and concentrates credit risk within the banking sector.
The coming weeks will show whether the surge in DDEP turnover was the beginning of a sustained rotation or merely the effect of unusually large trades in the February 2029 bond.
The case for greater duration exposure is supported by the policy rate remaining at 14 per cent and the prospect that investors could earn capital gains if inflation and market yields continue to decline.
The counterargument is increasingly difficult to ignore. Renewed pressure on the cedi, elevated energy costs and uncertainty over the inflation outlook could force investors to demand higher yields, particularly across the middle of the curve.
For now, Ghana’s fixed-income market is sending a nuanced signal. Liquidity has not disappeared, but investors are becoming more selective about where they deploy it. The most significant development is not the 1.72 per cent reduction in turnover. It is the GH¢1.2bn rotation from Treasury bills into DDEP bonds a shift that suggests investors are again testing how much duration risk they are prepared to carry.
