- Ghana’s Bond Market Activity Rises 4% but Outright Trading Falls Sharply
Trading on the Ghana Fixed Income Market rose to GH¢567.53m on October 2, but the increase was driven almost entirely by a sharp rise in sell/buy-back transactions rather than stronger outright investor demand for government securities.
Total securities traded increased 3.98 per cent from GH¢545.83m in the preceding session. The number of recorded transactions, however, fell by more than half, declining from 252 to 119.
That divergence matters. Higher turnover accompanied by fewer transactions typically points to a market dominated by a small number of large institutional trades rather than a broad improvement in liquidity.
The clearest evidence came from the repo segment. Sell/buy-back transactions involving government bonds surged to GH¢132.26m from GH¢8.28m in the previous session—an increase of almost 1,500 per cent.
Repos accounted for 23.3 per cent of total market activity on October 2, compared with only 1.5 per cent a day earlier.
These transactions are generally used by financial institutions to raise or place short-term liquidity against government securities as collateral. Their expansion may reflect stronger demand for secured funding rather than a fundamental reassessment of Ghanaian bond valuations.
Once repos are excluded, outright market turnover fell to approximately GH¢435.27mn from GH¢537.54mn—a decline of about 19 per cent.
The underlying cash market was therefore weaker than the headline GH¢567.53mn turnover suggests.
Treasury bills remained the largest outright segment, recording GH¢222.13m across 96 transactions. However, volume declined 27.5 per cent from GH¢306.35mn in the preceding session, while the number of trades dropped sharply from 217.
The most actively traded bill was the government security maturing on July 26, 2027. It recorded GH¢91.69m across eight transactions at a closing yield of about 8.99 per cent and a closing price of GH¢93.17 per GH¢100 of face value.
The security alone accounted for more than 41 per cent of total Treasury-bill volume.
Another bill maturing on August 2, 2027 generated GH¢53.91mn across 23 transactions, indicating that investors remained concentrated in securities approaching the one-year maturity area.
The reduction in Treasury-bill activity may partly reflect portfolio positioning after the Bank of Ghana maintained its monetary policy rate at 14 per cent. With inflation remaining relatively low but foreign-exchange pressures increasing, investors must balance expectations of further monetary easing against the risk that cedi weakness and imported inflation delay additional rate cuts.
Short-term securities continue to offer investors flexibility, but the declining volume suggests buyers may be becoming more selective about pricing.
Domestic Debt Exchange Programme bonds generated GH¢209.98m from 15 trades, down 8.2 per cent from GH¢228.74m in the previous session.
Although aggregate volume declined, trading shifted towards a broader range of maturities.
The February 2029 DDEP bond with an 8.65 per cent coupon was the most active, recording GH¢77.19mn across eight transactions. Its closing yield edged upwards to 13.81 per cent from 13.79 per cent, while its price eased to GH¢89.80.
The modest yield increase indicates slightly weaker demand at that maturity, although the movement was too small to suggest a significant repricing of sovereign risk.
A February 2032 bond generated GH¢44.93mn in a single transaction. Its closing yield declined by 11 basis points to 14.20 per cent, pushing its price upwards to GH¢81.23.
Further along the curve, the February 2034 bond traded GH¢30mn at a closing yield of 15.01 per cent, while the February 2035 instrument recorded GH¢37mn and closed at 14.36 per cent.
The mixed direction of yields across the DDEP curve suggests investors are distinguishing between individual instruments rather than making a single directional bet on Ghanaian rates.
The 2027 DDEP bond carrying an 8.35 per cent coupon provided one of the clearest examples of stronger demand. Its yield declined from 10.82 per cent to 10.35 per cent as its closing price rose to GH¢99.26.
By contrast, the August 2028 bond with a 10 per cent coupon closed at a yield of 12.50 per cent, while the February 2034 security ended at 15.01 per cent.
The resulting yield curve continues to compensate investors for holding longer-dated securities, but the pricing differences also reflect varying coupons, cash-flow structures and liquidity conditions across the post-restructuring instruments.
Two DDEP securities accounted for all GH¢132.26m of sell/buy-back activity.
A February 2031 bond generated GH¢80m in a single transaction at a yield of 13.72 per cent. The February 2038 bond recorded GH¢52.26m across three transactions, also at 13.72 per cent.
The concentration of repo activity in these two instruments suggests that their importance during the session was partly collateral-related.
A surge in repo turnover should not automatically be interpreted as increased investor appetite for long-term government debt. Repos transfer securities temporarily as part of a financing transaction; they do not necessarily represent a permanent change in ownership or a long-term portfolio commitment.
This distinction explains why outright DDEP trading could fall while overall market turnover increased.
Trading in newly issued government bonds rose to GH¢195,400 from GH¢78,178, but the segment still accounted for less than 0.04 per cent of total market activity.
Only one transaction was recorded in the new four-year government bond maturing in September 2030.
Its closing yield rose from 11.50 per cent to 11.80 per cent, while its price fell from GH¢101.53 to GH¢100.59.
The 30-basis-point increase in yield points to softer pricing, but the extremely low trading volume means the move should be interpreted cautiously. A single transaction is not sufficient to establish a reliable market-wide valuation.
The limited activity also underscores a persistent challenge for Ghana’s post-restructuring bond market: the existence of quoted prices does not always translate into deep and continuous liquidity.
Corporate bond trading increased 24.7 per cent to GH¢2.97m from GH¢2.38m, although only three transactions were recorded.
A corporate security issued by PPE and maturing in August 2030 dominated the segment, accounting for GH¢2.92m across two transactions. Another PPE bond maturing in August 2031 generated GH¢45,800.
Corporate securities represented only about 0.5 per cent of total GFIM turnover, showing that the market remains overwhelmingly dominated by government debt.
The small size of the corporate segment limits the ability of businesses to use the capital market as a meaningful alternative to bank credit. It also restricts diversification opportunities for pension funds and other institutional investors.
The October 2 session presents two different pictures.
At the headline level, turnover increased to GH¢567.53m. Beneath that figure, Treasury-bill and DDEP volumes declined, trade counts fell sharply and nearly one-quarter of the market was generated by four repo transactions.
The pattern therefore points more strongly to institutional liquidity management than to broad-based investment conviction.
Near-term market direction will depend on inflation expectations, cedi performance, government borrowing requirements and the timing of any further monetary-policy easing.
If inflation remains contained, investors may seek to lock in longer-dated yields before rates decline further. But persistent exchange-rate pressure could strengthen demand for shorter maturities and preserve the yield premium required on longer-dated bonds.
For now, Ghana’s fixed-income market is liquid in aggregate but uneven underneath: large institutional transactions can produce impressive turnover figures, while sustained two-way trading across many securities remains limited.
