Ghana’s bond market appears to have entered a quieter phase after investors committed strongly to a new four-year Government of Ghana bond, leaving activity in the secondary market sharply lower.
Secondary market turnover fell by 68.28% week-on-week to GH¢2.12 billion, with trading heavily concentrated around maturities between 2031 and 2034. These securities accounted for 74.22% of total turnover at a weighted average yield of 14.39%.
At the same time, the primary market attracted GH¢4.46 billion in bids for the new four-year bond maturing in September 2030. The government accepted GH¢3.15 billion at a clearing yield of 12.00%.
Speaking in an exclusive interview with The Vaultz News, Mr Isaac Kwasi Mensah, Financial Analyst and Portfolio Manager at SIC Financial Services Limited, said the sharp decline in secondary market activity should not immediately be interpreted as a loss of investor confidence.
New Bond Absorbs Investor Attention
According to Mensah, the timing of the new issuance played an important role in determining how investors deployed available liquidity.
The bond was issued after improved liquidity conditions following a GH¢2.3 billion COCOBOD DDEP payment and GH¢5.82 billion in unallocated bids from the August 31 Treasury bill auction.
“What happened is largely a reallocation of liquidity rather than investors completely stepping away from the fixed-income market. Once a sizeable primary-market opportunity comes along, investors naturally assess whether to deploy funds into that instrument or continue trading existing securities in the secondary market.”
Isaac Kwasi Mensah
He explained that the GH¢3.15 billion acceptance demonstrates that investors had sufficient appetite for the government’s new four-year paper.
“The level of bids received is particularly important,” Mensah noted. “GH¢4.46 billion in demand for a GH¢3.15 billion issuance tells us that investors were willing to commit significant funds at the prevailing market conditions.”
In his view, the primary market therefore temporarily became more attractive than secondary-market opportunities.
“When investors have fresh paper with a defined maturity and a clearing yield of 12%, some of the liquidity that would ordinarily circulate through secondary-market transactions can be absorbed at issuance. That is one of the reasons turnover subsequently softened.”
Isaac Kwasi Mensah
2031-2034 Bonds Dominate Trading
Despite the overall decline in turnover, investors continued to show strong interest in the belly of the yield curve.
The 2031 to 2034 maturity segment represented 74.22% of total secondary-market turnover, with an average yield of 14.39%. Securities maturing between 2027 and 2030 accounted for another 18.72%, while maturities beyond 2035 contributed just 7.06%.
Mr Mensah believes the concentration provides an important signal about where investors currently see value.
“The dominance of the 2031 to 2034 segment suggests that investors are still willing to take duration exposure, but they are being selective. They are not simply buying across the curve. They are focusing on particular maturities where the combination of yield, duration and expected market conditions appears attractive.”
Isaac Kwasi Mensah
He added that the relatively low activity in the long end of the curve could reflect caution over taking on excessive duration risk.
“Investors generally want adequate compensation for extending duration,” he said. “If that compensation is not sufficiently attractive, they may prefer securities closer to the middle of the curve.”
Investors Now Waiting for Settlement
With the new bond successfully priced and accepted, Mr Mensah expects attention to gradually return to the secondary market following settlement.
“The market has effectively entered a waiting period. Investors have participated in the primary issuance, and the next question is how that liquidity will circulate after settlement. I would expect secondary-market activity to recover modestly once settlement is completed.”
Isaac Kwasi Mensah
He stressed, however, that a recovery in turnover should not necessarily be interpreted as the beginning of a dramatic surge.
“Modest is the key word here,” Mensah cautioned. “We should not expect secondary-market turnover to immediately return to previous levels simply because the bond has settled.”
According to him, investors will continue to assess yields, liquidity and expectations around future government borrowing before increasing their trading activity.
Liquidity Remains Central to Market Direction
Mr Mensah also pointed to liquidity as one of the most important factors shaping the immediate outlook for Ghana’s fixed-income market.
The availability of funds following the COCOBOD DDEP payment and unallocated Treasury bill bids created room for investors to participate more aggressively in the new bond.
“Liquidity can change the behaviour of investors very quickly. When liquidity improves, investors have more flexibility to choose between Treasury bills, bonds and secondary-market opportunities. The challenge is determining where the best risk-adjusted return is available.”
Isaac Kwasi Mensah
He suggested that future government issuance could influence whether secondary-market activity strengthens or remains subdued.
“If another attractive primary-market opportunity comes shortly after settlement, we could again see liquidity being absorbed away from the secondary market,” he explained.
What Investors Should Watch Next
According to Mr Mensah, the next phase of the market will be determined by the interaction between primary issuance, secondary-market yields and investor expectations.
“The important thing is not to look at the 68% decline in turnover in isolation. We need to examine what happened to the liquidity, where investors deployed it and what the yield curve is telling us.”
He believes the 12.00% clearing yield on the new four-year bond could also become an important reference point for investors evaluating comparable securities.
“The market will naturally begin comparing existing instruments with the new 2030 bond,” the analyst said. “That comparison can influence pricing and trading decisions in the secondary market.”
Ultimately, the Portfolio Manager expects the bond market to regain some momentum after the settlement of the new issue, although he sees investors remaining selective.
“Ghana’s bond market is not necessarily experiencing a collapse in investor appetite. Rather, investors appear to be pausing, reassessing and repositioning their liquidity. Once settlement is completed, I expect activity to recover modestly, particularly if investors find attractive pricing across the curve.”
Isaac Kwasi Mensah
In the intervening time, the GH¢3.15 billion bond transaction has shifted the market’s centre of gravity from secondary trading to primary issuance. With investors having committed substantial funds to the new four-year paper, the coming sessions will reveal whether that liquidity eventually returns to the secondary market and whether the dominant 2031 to 2034 segment can sustain its position as the preferred area of trading.
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