Ghana’s bond market witnessed a notable surge in secondary trading activity last week, with the total value of trades increasing by over 25%. The traded volume rose from GHS1.23 billion to GHS1.41 billion, signaling renewed investor interest in government bonds. This rise reflects growing confidence among market participants, albeit tempered by broader economic concerns.
The secondary bond market—where already-issued government bonds are bought and sold—saw significant attention focused on a bond maturing in February 2027. This bond accounted for roughly one-third of all trades and offered an average yield of 20%, making it the most traded security during the period.
Short-term bonds dominated trading activity, comprising 60% of total transactions. These bonds, which are due for repayment soon, also delivered an average yield of 20%. Meanwhile, medium- to long-term bonds were less actively traded but offered slightly higher returns of around 21.3%, suggesting that some investors are still willing to lock in funds for a longer duration for better yields.
Despite increased trading, bond prices edged lower, which resulted in a modest rise in yields. This trend typically indicates investor caution, potentially driven by economic uncertainties or concerns about fiscal stability. Lower bond prices generally mean higher yields, which can attract more cautious buyers seeking better returns.
Looking ahead, analysts expect a continued uptick in bond market activity. This optimism is partly based on seasonal factors, such as end-of-month portfolio rebalancing by banks, which often injects more liquidity and movement into the market. However, investor sentiment remains closely tied to the broader economic outlook.
Source: Citi newsroom