Trading activity slows in secondary bond market, yield curve reverses downward
Activity in the secondary bond market for Government of Ghana papers witnessed a notable slowdown, marked by a 16.25% decline in total volume traded, which amounted to GH¢1.33 billion on a week-on-week basis.
A significant portion of the market turnover, approximately 76%, was attributed to exchanges from the February 2028 (coupon: 8.50%) and February 2029 (coupon: 8.65%) papers.
In a notable reversal, the local currency (LCY) yield curve experienced a downward shift, with the average Yield-To-Maturity on the 2027-2030 papers decreasing to 19.13% (-198 basis points). Similarly, the 2035-2038 papers retreated to 17.07% (-14 basis points).
Analysts anticipate the ongoing sluggish trend in bond market activity to persist as investors increasingly favor treasury bills to optimize investment returns, particularly against the backdrop of declining T-bill yields.
Concurrently, the government has outlined plans to raise GH¢4.87 billion through 91-day to 364-day bills to refinance GH¢4.15 billion worth of maturing bills. Analysts caution that the relatively high auction target, reflecting a 6.06% increase week-on-week, could potentially exert upside pressures on yields in the near term.
Against this backdrop, market participants remain vigilant as they navigate evolving dynamics in Ghana’s bond market, closely monitoring shifts in investor sentiment and government policy decisions.
