Ghana’s fixed income market recorded trading volume of GH¢869.5 million on Thursday, October 10, driven entirely by government securities as corporate bonds remained completely inactive for yet another session.
Sell and buy back trades dominated the day’s activity, accounting for GH¢425.9 million or approximately 49 percent of total volume across 27 transactions. This substantial repo activity reflects continued reliance on short-term liquidity management by financial institutions navigating tight money market conditions.
New government notes and bonds generated GH¢341.3 million in trading across 38 transactions, with a 2036-maturity bond (GOG-BD-05/02/36) attracting the highest single-security volume of GH¢190 million at a yield of 14.52 percent. The bond’s closing price of 76.43 indicates investors are demanding significant discounts on longer-dated government paper.
Bank of Ghana bills contributed GH¢102 million through a single trade in 56-day paper priced at 99.14, suggesting strong demand for the shortest duration instruments. Treasury bills added modest volume of GH¢285,416 across 219 transactions, reflecting continued but fragmented trading in shorter-term government securities.
Yields across government securities ranged from 3.29 percent to an eye-watering 32.76 percent, with the wide spread reflecting differences in maturity, credit perceptions, and market liquidity conditions. The higher end of the yield spectrum signals significant investor concerns about Ghana’s fiscal trajectory and debt sustainability.
The 2023-GC series bonds dominated new government securities trading, with the 2023-GC-13 series recording GH¢132.1 million in volume and 2023-GC-2 generating GH¢118.1 million. Yields on these instruments ranged from 15.04 percent to 16.48 percent, substantially above pre-debt restructuring levels and reflecting persistent risk premiums demanded by investors.
Corporate bonds recorded zero trading volume for the day, continuing a pattern of near-dormancy that has characterized the segment for extended periods. Listed issuers including Letshego Ghana, Bayport Savings, Ghana Cocoa Board, Izwe Savings, Kasapreko, and Quantum saw no investor interest, raising questions about the viability of Ghana’s corporate bond market.
The complete absence of corporate bond trading highlights structural challenges facing private sector debt financing. High government borrowing rates crowd out corporate issuers, while credit risk concerns and liquidity constraints discourage investor participation in corporate paper.
Old government notes and bonds recorded no trading activity, consistent with their replacement through the domestic debt exchange program that restructured Ghana’s local currency obligations. The zero volume confirms the transition to new securities following the controversial debt restructuring.
Repo market activity showed no collateralized repo or Global Master Repurchase Agreement transactions, with all short-term liquidity management occurring through sell and buy back arrangements. This concentration in one repo structure may reflect market preference or operational constraints affecting alternative repo mechanisms.
The 285 total trades across all segments on Thursday demonstrates relatively active order flow, though volume concentration in a handful of large transactions suggests institutional rather than retail-driven activity. The fixed income market remains primarily an institutional space with limited retail investor participation.
Treasury bill trading across 219 transactions generated minimal volume compared to bond activity, indicating investor preference for either very short duration (BOG bills) or longer maturities with higher yields. The middle duration treasury bills appear less attractive in current conditions.
Thursday’s trading patterns reflect Ghana’s ongoing fiscal challenges and their impact on domestic capital markets. Government securities absorb available investment capital while offering yields that make corporate bonds comparatively unattractive, particularly given credit risk differentials.
The fixed income market’s heavy government orientation creates dependencies that complicate private sector development. When government paper offers double-digit yields with perceived sovereign backing, corporate issuers struggle to compete even with similar or higher yields given additional credit risks.
For banks and institutional investors managing portfolios, Thursday’s data illustrates the continued dominance of government securities as both investment and liquidity management tools. Whether this pattern serves long-term economic development remains questionable when private sector financing options remain effectively dormant.
The GH¢869.5 million in trading volume appears substantial but must be contextualized within Ghana’s broader financial system. These figures represent secondary market activity rather than new capital formation, with much volume occurring through repo transactions that simply recycle existing securities.
Looking ahead, reviving corporate bond market activity will require significant yield compression in government securities, improved economic fundamentals, and enhanced credit assessment capabilities. Until government borrowing costs decline substantially, expecting meaningful corporate bond activity appears unrealistic.
