Bond market investors keenly await treasury issuance

Bond market investors have signaled keen interest in the upcoming issuances of government debt, as some are holding back funds from the secondary market ahead of the February issuance, a senior analyst with Databank Research, Courage Kingsley Martey, has said.

Currently, there is a slowdown in trading on the fixed income market, largely for the longer-dated tenors.

“While issues of debt remain a lingering concern, it is difficult to rule out market expectations of the treasury’s next issuance for February as a reason for the slowdown in trading on the fixed income market. We noticed that the slowdown in trading on the fixed income market is largely along the longer-dated tenors, with most of the interest now shifting to the front of the yield curve,” Mr. Martey said in an interview with Business24.

He observed that yields on government securities have gone up slightly this week following the publication of latest economic and debt data by the Bank of Ghana.

“I believe a combination of the MPC data on government’s debt situation together with some investors holding back funds ahead of the February issuance are key explanations for this week’s market performance,” he said.

At the end of November 2020, domestic public debt was GH¢147.3bn, representing 38.2 percent of GDP, out of the GH¢286.9bn total public debt.

He projected that government would want to build a buffer for liability management in the event that market conditions tightened unexpectedly amidst the second wave of the Covid-19 pandemic.

This month, GH¢6.67 billion of debt is expected to be issued, including a 7-year bond of GH¢700 million.

“Ideally, they [government] would want to build a buffer for liability management in the event that market conditions tightened unexpectedly. And because of this, we could see excess uptake during bond issuances,” Mr. Martey said.

“However, the T-bill auctions have shown a commitment by government to stay to the planned auction targets despite the stronger demand they received during the auctions,” he added.