Ghana's secondary bond market experienced a significant decline in activity last week. Aggregate turnover fell by 46.60% week-on-week, reaching GHS 1.25 billion. This marks a substantial reduction in the trading volume of government bonds after issuance.
The most active bonds were those maturing between 2027 and 2030. This segment accounted for 88.77% of the total turnover, trading at a weighted-average yield of 11.25%. Bonds maturing from 2031 to 2034 made up 11.23% of the turnover, with an average yield of 12.35%. Long-term bonds, specifically those maturing from 2035 to 2038, showed very limited trading activity.
This reduced bond market activity comes amidst ongoing economic adjustments in Ghana. The country has been navigating a difficult financial landscape, with efforts to stabilize its public debt. The bond market plays a crucial role in providing liquidity for the government and institutional investors. Fluctuations in turnover reflect shifts in investor confidence and liquidity in the financial system.
Databank Research pointed out that market activity will likely remain concentrated in shorter to medium-term bonds. They also stated, “Looking ahead, market positioning is expected to remain cautious ahead of the 20 May 2026 MPC meeting, where we expect the Bank of Ghana to hold the policy rate. However, Fitch’s upgrade of Ghana’s sovereign rating to ‘B’ from ‘B-’ with a Positive Outlook should provide some support to investor sentiment.” The Monetary Policy Committee (MPC) meeting of the Bank of Ghana sets the policy rate, a key benchmark interest rate affecting borrowing costs.
Investors will closely monitor the upcoming MPC meeting for signals on the central bank’s monetary policy direction. A stable policy rate could reassure the market and potentially lead to increased activity. The recent credit rating upgrade by Fitch, improving Ghana’s sovereign rating, could also positively influence investor sentiment over time. This upgrade suggests a more positive outlook on Ghana’s ability to meet its financial obligations, which is encouraging for bondholders.
However, the cautious market positioning indicates that investors are still weighing various factors. These factors include inflation trends and the broader economic stability. The modest secondary market activity for the newly issued 7-year 2033 bond, with GHS 140.60 million traded across 18 transactions, reinforces this cautious approach. Continued close observation of government fiscal policies and global economic conditions will be necessary for market participants.