Bond trading hits GHC9.8bn

The total value of bonds traded on the Ghana Fixed Income Market (GFIM) has reached a peak of GHC9.8billion as at September 2016, from GHC5billion a year before.

“It is possible to raise money through bonds on this market and this is as a result of the fact that we do have pension funds that have the appetite for debt instruments,” Ekow Afedzie, Deputy Managing Director of the Ghana Stock Exchange (GSE), said at the listing of the US$5million five-year bond as the first and second tranches of Ghana Home Loans’ US$100million medium term note.

The US$5million bond will be traded on the GFIM for the next five years in both dollars and cedis and has commenced trading at 9percent on the dollar, a rate which is higher than the recently raised local dollar bond by the government.

Mr. Afedzie explained that with the GFIM commencing operation just last year, the market has seen a remarkable increase in the secondary trading of bonds, but liquidity challenges remain.

So far, GH374million has been raised in corporate bonds by six companies in finance, real estate, and commodities, since the establishment of the Ghana Alternative Exchange (GAX) in 2014, but all these bonds have been migrated to the GFIM.

“Ghana Home Loans is the sixth company issuing bonds in recent times. We do have five of them already on the market and most of them came through the Ghana Alternative Exchange (GAX) but we have migrated all of them onto the GFIM. So we will have Ghana Home Loans on the GFIX and not the GAX,” he said.

Whilst the migration will allow dealers the opportunity to trade more, Mr Afedzie said the fact that National Pensions Regulatory Authority’s guidelines favour debt, the market needs to have the supply or issuance side boosted.

“We need to have more corporate bonds on the market so we can have the demand side meeting the supply side adequately,” he added.

Data from the market shows that on Monday, November, 14th, GH¢194million worth of fixed income instruments were traded whiles on Tuesday, GH¢219million worth of fixed income securities were traded.

A further breakdown of Tuesday’s trades, shows that GH¢205million worth of bonds were traded whiles shorter term notes stood at GH¢2.3million; 182-day bills stood at GH¢6.9million, and 91-day stood at 4.75million.

“This tells the trend we will be seeing going forward and we will have some more liquidity on the bonds on this market,”

Dominic Adu, Chief Executive Officer of Ghana Home Loans, said: “Using bonds to write mortgages for potential borrowers is exciting and we also like being part of the capital market. To have our bonds traded here for five years…means we can extend our tenure to ten years and we are quite excited.”

He assured investors they were making one of the best investments in Ghana. “You are getting 9percent yield on the dollar. The government gave 6percent…you have got one of the safest assets here. This is not the only one because the registration is for US$100million and we will be calling on you to invest in more.”