Ghana’s fixed income market has experienced a steady decline in both volume and value traded throughout the first half of the year.
In January, the trade volume amounted to 14.9 billion, but it decreased each month, dropping to 12.6 billion in March and further down to 9.2 billion in June. Similarly, the value of trades started the year at GH¢11.4 billion, declining consistently to GH¢10 billion in March and then to GH¢7.9 billion in June.
The reasons behind this consistent decline are not entirely clear, but market watchers suspect it is linked to a general decline in confidence in the economy. Following the domestic debt exchange, investors have become wary of long-term investments with the government, preferring to invest in 91-day treasury bills rather than trading in bonds. Analysts believe that the volumes and values could have been even lower if not for the inclusion of many buy-back transactions.
Ghana had a vibrant fixed income market until the government faced financial difficulties and could no longer service its debts, leading to a debt restructuring programme required to access an International Monetary Fund (IMF) bailout. The debt exchange severely impacted the market, and it has not fully recovered, despite the government beginning to pay coupons on the new and restructured bonds.
The Ghanaian government is set to make its third coupon payment of GH₵6.1 billion in August 2024. This follows two previous payments, with the second payment of approximately GH₵5.9 billion made in February 2024, as outlined in the Mid-Year Budget Review. Market analysts suggest that the government must also resume coupon payments to external creditors to signal a return to a semblance of former market stability.
On June 24, 2024, the government reached an agreement in principle with Eurobond holders’ committees to restructure approximately $13.1 billion of outstanding Eurobonds. This agreement includes reducing the nominal value of the outstanding Eurobonds by $4.7 billion and providing debt service relief of about $4.4 billion during the program period. Earlier, on June 11, 2024, the government and the Official Creditors Committee reached an agreement on a Memorandum of Understanding covering the restructuring of about $5.1 billion of official bilateral debt.
The debt restructuring aims to reduce the present value of Ghana’s public debt to 55 percent by 2028, as outlined in the IMF-supported program. The government remains committed to engaging in good faith negotiations with other commercial external creditors, including private banks and suppliers or contractors that have provided commercial loan facilities.
