The bond markets enter the New Year in an ebullient mood as Investors’ confidence boost despite the economic devastation wrought by the coronavirus pandemic, suggesting that the economy seems to be picking up in the deepest global crises in a century.
The Bank of Ghana has revealed that the 2-year Ghana Cedi denominated Treasury bond issuance, maturing in 2023 with a settlement/ Issue date effective today, January 4, 2021 to both resident and non-resident persons alike made total sales of approximately GH¢1.03 billion at the Government of Ghana (GOG) securities auction, showing a bounce back in investors’ confidence.
Analysts also emphasize that the bond issuance is especially necessary if the government’s borrowing cost are super-low and investors still seem eager to buy its debt as fast as it is issued.
Government Securities are issued for the financing of Government transactions, to redeem maturing debts and for the development of the Ghana financial markets; by providing risk-free benchmark securities that act as reference for the issue of debt instruments in the money and capital market by corporates and nongovernment institutions.
Subsequently, the emergence of the coronavirus pandemic with its damaging effects required that the government keeps accepting all bids for bonds issued to enable it finance its increasing debt.
Although some uncertainties continue to remain in the market with investors mindful of the COVID-19 pandemic and other fiscal challenges in the Ghanaian economy, Investors’ appetite for bonds appear to have picked up even though they are usually unsecured implying that they naturally carry more risk.
More so, the global recovery is sputtering with most major asset classes already priced for perfection and even though Investors had to endure several days of unbridled panic, they are convinced that riskier assets like bonds and stocks will continue to perform well in 2021.
Bond funds have indeed largely fulfilled their roles as steadying forces for portfolio during stressful markets despite warnings that bond investors would likely have to accept weaker returns as yields remain at fairly low levels in spite of the much anticipated acceleration in economic activity stemming from the vaccine optimism.
If vaccines turn out to be the silver bullet that puts an end to the pandemic and speed up the recovery, then it stands to reason that bond yields will rise, possibly quite sharply.

Additionally, the government has appointed Bond Market Specialists (BMS) from within the Primary Dealers and licensed investment dealers to conduct Government’s bond market operations. This reform is expected to help improve the efficiency and transparency of the Ghana Fixed Income Market (GFIM) and Government Securities Market.
“Bond Market Specialist is an institution authorised by the Ministry of Finance and the Bank of Ghana to participate in the bookbuilding auction of Government notes and bonds”.
However, analysts anticipate that in 2021 there is the risk of a stronger than expected rise in inflation fuelled by unprecedented levels of monetary and fiscal stimulus, and the spike in demand once vaccines are widely distributed.