Ghana’s bond market is experiencing a significant revival, with trading activity surging over 106% week-on-week to a staggering GH¢1.14 billion.
This sharp rise, compared to GH¢556 million recorded in the previous week, reflects growing investor confidence and renewed momentum in the local debt market, largely triggered by positive macroeconomic developments and month-end portfolio adjustments by banks.
The bullish sentiment in the secondary bond market follows the recent announcement of a US$370 million agreement under the International Monetary Fund’s (IMF) staff-level agreement with Ghanaian authorities.
Market watcher and analyst Mr Isaac Kwesi Mensah, a Corporate Finance Research Analyst at SIC Brokerage, while reacting to the development in an interview with the Vaultz News, attributed the spike in trading volumes to renewed investor optimism regarding the country’s economic outlook and fiscal reforms.
This development marks a significant milestone in Ghana’s ongoing economic recovery program, giving a much-needed boost to investor morale.
“Investor sentiment has improved considerably since the IMF announcement. There’s a visible pick-up in risk appetite, especially in medium- to long-dated maturities.”
Mr Isaac Kwesi Mensah
General Category Bonds Take the Lead
The General Category bonds remained the primary driver of market volumes, continuing their dominance in the secondary trading space. Notably, bonds maturing in February 2030 and February 2033 accounted for 38% of the total volume traded during the week.
Mr Kwesi Mensah noted that these maturities cleared at an average Yield-To-Maturity (YTM) of 23.5%, makes them attractive options for investors seeking high-yield opportunities in a stabilizing macroeconomic environment.
“The increased activity around these specific maturities reflects a strategic shift among investors who are now favoring instruments that strike a balance between yield and duration. These bonds are being favored due to their liquidity profile, improving outlook for fiscal consolidation, and the anticipation of debt sustainability under the IMF-supported program.”
Mr Isaac Kwesi Mensah
Yield Curve Movements Signal Shifting Preferences
The structure of the Local Currency (LCY) yield curve also saw significant movement, reflecting a change in investor preferences across tenors. The short end of the curve, typically consisting of bonds with nearer-term maturities, saw its share of total trades decline by 6% week-on-week to 53%. The analyst explained that these instruments were cleared at an average YTM of 23%, indicating slightly lower risk premiums as confidence builds.
Meanwhile, the analyst believes that the belly-to-tail end of the curve, encompassing medium- to long-term maturities, accounted for 47% of total trades, with yields averaging 22%.
“The nearly equal distribution of trading volumes between the short and longer ends suggests a more balanced risk appetite among investors, with many adopting a wait-and-see approach ahead of key policy announcements.”
Mr Isaac Kwesi Mensah
What’s Driving the Momentum?
Mr Mensah noted that several factors are underpinning the recent surge in bond market activity. Chief among them, he said is the month-end rebalancing of portfolios by commercial banks, which traditionally adjust their holdings to reflect capital adequacy requirements and regulatory benchmarks.
“Additionally, the optimism generated by the IMF staff-level agreement has reignited faith in Ghana’s debt restructuring efforts and economic reform agenda. The IMF’s support, coupled with ongoing fiscal adjustments and revenue-enhancing measures by the government, has calmed fears of further macroeconomic instability.”
Mr Isaac Kwesi Mensah
Mr Kwesi Mensah noted that although trading volumes are unlikely to remain this elevated in the near term, the current uptick is a strong signal that confidence is returning. “We are seeing signs of consolidation and improved transparency. The IMF’s continued engagement is encouraging for both domestic and international investors,” said the market strategist.
Outlook: A Wait-and-See Approach
Despite the upbeat sentiment, Mr Mensah cautioned that trading activity may moderate in the coming weeks.
“This is largely due to market participants awaiting further direction from the Ministry of Finance, which is expected to release its revised medium-term debt strategy. The updated strategy will be critical in shaping market expectations and determining the trajectory of yields going forward.”
Mr Isaac Kwesi Mensah
He indicated that investors are also keenly watching global economic trends, particularly interest rate decisions by the U.S. Federal Reserve, as these external factors could influence capital flows into emerging markets like Ghana.
In the meantime, the analyst averred that the strong rebound in bond trading is a welcome development for policymakers and investors alike. “It signals not only a temporary uplift in market activity but also a broader shift toward restoring credibility and liquidity in Ghana’s fixed-income market.”
If this trend continues, it could set the stage for a more robust and resilient debt market, capable of supporting long-term fiscal and economic stability.
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