- Ghana’s Fixed-Income Turnover Jumps 31.64% As Investors Rotate into DDEP Bonds
Trading on the Ghana Fixed Income Market rose sharply during the week ending October 9, driven by stronger activity in Treasury bills, Domestic Debt Exchange Programme bonds and sell-buy-back transactions as investors repositioned across the government securities curve.
Total market turnover reached GH¢8.98 billion, up from GH¢6.82 billion in the previous week. The GH¢2.16 billion increase represented week-on-week growth of 31.64 per cent and pointed to improving secondary-market liquidity at the beginning of the fourth quarter.
The headline rise was broad enough to extend beyond a single instrument, although trading remained overwhelmingly concentrated in government securities.
Treasury bills accounted for GH¢4.19 billion, or 46.67 per cent of total activity, while DDEP bonds generated GH¢4 billion and represented 44.49 per cent. Together, the two instrument classes accounted for more than 91 per cent of all transactions reported during the week.
The composition suggests that investors are balancing two distinct preferences. Treasury bills continue to provide liquidity and relatively low duration risk, while selected DDEP bonds are attracting investors seeking opportunities further along the yield curve.
The stronger performance of bonds is particularly significant. Since the domestic debt restructuring, the secondary market has had to rebuild liquidity, establish reliable pricing points and overcome the segmentation created by different maturities and coupon structures.
The latest figures indicate that trading is deepening, but the distribution of demand shows that this recovery remains selective rather than uniform.
Turnover in DDEP bonds rose by GH¢1.24 billion, from GH¢2.76 billion in the previous week to almost GH¢4 billion.
That represented growth of 44.77 per cent. More importantly, the increase in DDEP bond trading accounted for about 57.25 per cent of the entire GH¢2.16 billion rise in market turnover.
This means the weekly expansion was not simply the result of investors rolling over short-term Treasury positions. Longer-dated restructured securities provided the principal engine of growth.
Treasury-bill turnover nevertheless remained the single largest component of the market. Trading increased by 15.18 per cent from GH¢3.64 billion to GH¢4.19 billion, adding GH¢552.35 million to weekly activity.
Although Treasury-bill turnover increased in absolute terms, its share of the overall market fell from 53.34 per cent to 46.67 per cent because DDEP bonds and other instruments expanded more rapidly.
DDEP bonds moved in the opposite direction. Their market share increased from 40.46 per cent to 44.49 per cent.
That shift is an important indication of investor behaviour. The market remained cautious, but the balance moved modestly away from near-exclusive reliance on short-dated instruments and towards selected medium- and long-term bonds.
Trading excluding sell-buy-back transactions rose from GH¢6.41 billion to about GH¢8.30 billion, an increase of 29.43 per cent. This suggests that the expansion was supported by outright securities activity and was not solely the result of short-term funding transactions.
Sell-buy-back transactions rose by 66.10 per cent, from GH¢411.88 million to GH¢684.12 million.
The GH¢272.24 million increase contributed approximately 12.61 per cent of the overall rise in market turnover. Their share of total activity also increased from 6.04 per cent to 7.62 per cent.
Stronger sell-buy-back activity can signal growing use of government securities for liquidity management. Such transactions allow market participants to obtain short-term funding against securities while agreeing to reverse the trade later.
An active market in these transactions can support broader fixed-income liquidity by enabling dealers and institutional investors to finance their holdings without immediately disposing of them.
However, rising sell-buy-back volumes should not automatically be interpreted as outright investor demand for the underlying bonds. They reflect funding and balance-sheet management as much as investment appetite.
The distinction is important because headline turnover can increase even when investors’ final holdings of particular securities remain largely unchanged.
Trading in newly issued government bonds increased from just GH¢1.17 million to GH¢78.35 million.
This represented an increase of more than 6,600 per cent, the largest percentage change among all instrument classes. The figure, however, was exaggerated by the unusually low previous-week base.
The new bonds accounted for only 0.87 per cent of total market turnover despite the dramatic percentage increase.
Activity was concentrated in two instruments. The four-year government bond maturing in September 2030 recorded GH¢45.85 million in trades, compared with GH¢1.12 million previously. The seven-year bond maturing in March 2033 generated GH¢32.50 million, up from only GH¢50,000.
The rise is still encouraging because new securities require consistent secondary-market trading to establish reliable pricing benchmarks. Greater liquidity in these instruments could eventually strengthen the government bond curve and support pricing for corporate issuers.
But the scale remains modest relative to DDEP securities and Treasury bills. The market is therefore still anchored in instruments created through the domestic debt restructuring rather than the emerging stock of post-restructuring bonds.
Old government bonds remained almost inactive. Turnover declined by 10.43 per cent from GH¢661,288 to GH¢592,330, representing less than 0.01 per cent of market activity.
The improvement in DDEP bond turnover concealed significant concentration at the maturity level.
The nine-year DDEP bond maturing in February 2032 was the most actively traded security in the detailed bond schedule. Turnover reached GH¢1.13 billion, up from GH¢456.61 million in the previous week—a rise of 147.80 per cent.
It accounted for 28.34 per cent of the GH¢3.99 billion captured in the maturity-level government bond breakdown.
The six-year DDEP bond maturing in February 2029 followed closely, with turnover of GH¢1.12 billion. Activity declined by 24.11 per cent from GH¢1.47 billion, but the security still accounted for 28.03 per cent of the listed bond transactions.
The seven-year DDEP bond maturing in February 2030 recorded one of the week’s strongest increases. Turnover rose from GH¢40.50 million to GH¢867.01 million—an expansion of more than 2,000 per cent. It accounted for 21.71 per cent of the maturity-level total.
Together, the 2029, 2030 and 2032 DDEP maturities represented 78.08 per cent of the listed government bond trades. Adding the February 2027 DDEP bond increased the concentration to 88.12 per cent.
The level was broadly consistent with the previous week, when the three most active maturities accounted for about 78.60 per cent of the detailed total. The identity of the leading instruments changed, but the market’s concentration remained high.
This pattern implies that overall liquidity should not be mistaken for uniform liquidity. Investors may be able to transact large amounts in the favoured securities while facing thinner pricing and wider transaction costs in less active maturities.
The February 2032 bond’s emergence as the most actively traded instrument, alongside the sharp rise in the February 2030 security, suggests that investors are increasingly prepared to take exposure beyond the immediate refinancing horizon. Yet the decline in the 2029 bond indicates that portfolio rotation, rather than indiscriminate demand for all DDEP instruments, shaped the week.
The yield curve sent mixed signals, with yields rising on some highly traded DDEP bonds and falling on several new and longer-dated securities.
The four-year DDEP bond maturing in February 2027 recorded the largest increase at the short end. Its yield rose by 67 basis points from 10.35 per cent to 11.02 per cent, even as turnover more than doubled from GH¢175.76 million to GH¢400.74 million.
Ordinarily, rising yields indicate declining prices. The combination of stronger turnover and a higher yield suggests that increased activity may have been driven partly by sellers accepting lower prices rather than buyers bidding aggressively.
The five-year DDEP yield declined by 23 basis points to 12.21 per cent, although turnover fell by 64.17 per cent to GH¢80.23 million. The lower yield is therefore based on a relatively thinner pool of transactions and may provide a weaker price signal than movements in the more actively traded securities.
The six-year DDEP yield increased by 17 basis points to 13.98 per cent, while the seven-year DDEP yield rose by 14 basis points to 14.37 per cent. Both instruments remained significant to the week’s trading, giving their yield movements greater market relevance.
The nine-year DDEP bond also gained 17 basis points to close at 14.37 per cent despite turnover rising to GH¢1.13 billion. This combination points to a market willing to trade the security actively but demanding slightly more compensation for duration and credit exposure.
At the longer end, movements were uneven. The 11-year DDEP yield declined by 24 basis points to 14.77 per cent, while the 12-year yield rose by 44 basis points to 14.80 per cent. The 15-year yield fell by 18 basis points to 14.75 per cent, but turnover in that instrument was only GH¢1.13 million.
The 13-year bond remained unchanged at 15.50 per cent, although no trades were recorded in the detailed volume schedule. Its quoted yield should consequently not be read as evidence of fresh price discovery.
The mixed curve indicates that investors are not making a single broad call on interest rates. Pricing continues to reflect security-specific liquidity, maturity preferences, coupon structures and the size of transactions executed during the week.
The yield differential between new government bonds and comparable DDEP securities remains notable.
The new four-year bond maturing in September 2030 traded at 11.65 per cent, down 15 basis points from the previous week. By contrast, the DDEP bond maturing in February 2030 yielded 14.37 per cent.
Similarly, the new seven-year bond maturing in March 2033 traded at 12.52 per cent, eight basis points lower week on week. The 10-year DDEP bond maturing one month earlier was quoted at 14.22 per cent, although no turnover was recorded in that DDEP security.
The lower yields on the new bonds may reflect differences in coupon structure, liquidity expectations or investors’ treatment of post-restructuring obligations. It may also indicate a premium attached to securities issued under Ghana’s more recent borrowing framework.
However, the comparison must be treated cautiously. DDEP bonds carry different cash-flow profiles, and some reference yields are derived from considerably deeper trading than others.
The important development is that the new bonds are beginning to trade in sufficient amounts to create additional points on the sovereign curve. Sustained activity will be required before those yields can serve as robust benchmarks.
Corporate securities recorded the fastest substantial increase outside new government bonds.
Turnover rose from GH¢9.53 million to GH¢30.66 million, an increase of 221.67 per cent. Corporate activity nevertheless accounted for only 0.34 per cent of the GH¢8.98 billion market total.
The improvement demonstrates that some demand exists beyond sovereign securities, but the corporate segment remains too small to provide a meaningful funding alternative for most private businesses.
Government securities continue to dominate institutional portfolios because of their availability, standardisation and treatment within financial-sector balance sheets. Corporate issuers face the additional burden of obtaining credit ratings, meeting disclosure requirements and persuading investors to accept company-specific risk.
A deeper corporate bond market will require more than occasional increases in weekly turnover. It needs a regular pipeline of credible issuers, stronger market-making and sufficient secondary liquidity to allow investors to exit positions without large price concessions.
The immediate outlook points to continued strength in Treasury-bill and selected DDEP bond trading, but the direction of yields is likely to remain uneven.
Treasury bills should continue to attract investors prioritising liquidity and short-duration exposure. DDEP securities are likely to gain from portfolio rotation, particularly where institutions identify bonds offering attractive yields relative to their remaining maturities.
The rise in secondary-market turnover is constructive because it improves price discovery and gives investors more options for adjusting their portfolios. Yet the persistence of concentration means that liquidity risk has not disappeared. Four DDEP maturities accounted for nearly nine-tenths of the detailed government bond transactions during the week.
Investors will also monitor inflation, exchange-rate conditions, government borrowing requirements and the Bank of Ghana’s monetary-policy direction. A stable macroeconomic environment could support bond prices and gradually lower yields, while renewed cedi pressure or higher inflation expectations could cause investors to demand greater compensation.
The strongest conclusion from the week is therefore not that investors have abandoned caution. Rather, they appear increasingly willing to trade Ghanaian government bonds where liquidity and pricing are sufficiently attractive.
The GH¢8.98 billion turnover represents an important improvement in market activity. Whether it signals lasting deepening will depend on whether trading spreads across more maturities, new government bonds develop reliable liquidity and the corporate market begins to claim a meaningful share of investor portfolios.
