Government has signaled a strong move toward restoring confidence in its financial markets by initiating the process to resume the issuance of domestic bonds. This comes after the government temporarily abandoned the bond market following the controversial Domestic Debt Exchange Programme (DDEP).
The Ministry of Finance, through the Bank of Ghana, has issued a Request for Proposals (RFP) inviting banks and licensed securities dealers to apply to become Primary Dealers and Bond Market Specialists for its domestic treasury securities.
The move marks a crucial effort to normalize the government’s borrowing activities and rebuild a functioning domestic bond market that was severely disrupted by the DDEP.
Finance Minister Cassiel Ato Forson is set to appoint new Primary Dealers who will be responsible for facilitating the consistent issuance of treasury securities, including medium- and long-term bonds, in line with a periodic calendar.
Commitment to Market Integrity
The government has set stringent requirements for applicants to ensure the new issuance program is stable and demonstrates a commitment to market integrity and liquidity. Accodging to the statement issued by BoG, prospective Primary Dealers must commit to taking up a minimum target in all government security auctions. They must also commit to actively trading the securities on the secondary market to ensure liquidity for investors. Furthermore, applicants for the Bond Market Specialist role are required to show evidence of their book-running capacity, including distribution and marketing strength, and must provide a plan for capacity building initiatives for the government and domestic market participants.
The selection of these market specialists is a vital step in the government’s strategy to address its funding needs, reduce interest expenses, and diversify its investor base following the comprehensive debt restructuring effort.
