Bond market’s activity wanes in April 2021

Trading activity on the Ghana Fixed Income Market (GFIM) was subdued in April 2021 compared to March — which climbed to an all-time monthly high — data from the Ghana Stock Exchange has revealed.

The data, which summarised market activities in April 2021, indicated that volumes traded on GFIM dipped by 40 percent to 15.9 billion, valued at GH¢16.62 billion down from the all-time monthly high trade volume of 26.7 billion made in March 2021.

This, according to the Exchange, is as a result of the delayed publication of the domestic debt issuance programme for April to June, which kept the market largely uncertain about the government’s position on the market.

Nevertheless, government’s securities on the fixed income market dominated trades making up about 90.31 percent of the market share while corporate notes and bonds accounted for the remaining.

The market had an impressive 73 percent higher volumes traded during the month as compared to the same period in 2020.

Cumulatively, from January to April 2021, volumes traded on the market reached around 75.90 billion, valued at GH¢78.37 billion. Trades during the month was about 140.2 percent higher than the same period in 2020.

Courage Kingsley Martey, a senior analyst with Databank in an interview with Business24 explained that a slowdown in inflows or demand from foreign portfolio investors during the month is largely the cause of the decline in trades.

“This segment of the market added significant liquidity to the market during the first quarter as almost the Cedi equivalent of US$1 billion came through from offshore investors. But those flows moderated in April 2021,” Martey said.

He added: “The government’s absence on the bonds market in the form of new issuances weighed on the sell-side of the market, such that even if there were buy orders, the many offers came through in the form of new securities.”

Interbank liquidity tightened towards the end of April, resulting in a reduction of trading activity of bonds by commercial banks.

However, Mr. Martey said, “We expect to see a rebound in trading activity in May, with the government announcing in its issuance Calendar to issue a 5-yr and 7-yr bond in May 2021. These new securities should provide the catalyst for improved activity.”