The high yields on government securities will keep interest payments elevated.
According to the research arm of investment bank, IC Securities, the yields will resume the downturn in late 2023 with the anticipated International Monetary Fund programme as a catalyst.
After plummeting from a peak of 35.0% to between 18.5% and 26.8% by mid-March 2023, yields on T-bills have found renewed upward drive from the unexpected 150 basis points hike in the policy rate.
In the near-term, the government continued dependence on the money market, without an active primary bond market, will hold yields elevated around current levels of between 19.0% – 27.0%. However, IC Securities foresee scope for a renewed decline in late 2023 towards the 15.0% - 19.0% range.
“Our outlook is supported by the expected start of Ghana’s IMF programme, which will strengthen expenditure controls and reduce the Treasury’s borrowing requirements. Additionally, a sustained and potentially faster pace of disinflation will intensify the downward pressure on yields as the Treasury deepens its domestic liability management”.
It added that on the secondary fixed income market, “we continue to expect a quiet bond market as investors and traders struggle to price the new ‘payment in kind’ bonds while the higher risk-rating on the old bonds dampens their appeal. However, we observe strong secondary market activity for T-bills as investors cheer its exclusion from the domestic debt restructuring amidst sizable uptakes at the weekly primary market offers.”
Furthermore, IC Securities said it expect trading in T-bills to continue dominating the secondary fixed income market in 2023 amidst the lack of price action on the bond market. This will drive down trading yields with a spill over to the primary market for T-bills, supporting its downside view on yields by the end of 2023.
Latest Stories
-
Democracy is going to reverse in West Africa if we don’t tackle economic hardships – Atuguba
27 mins -
Bawumia commissions 124 housing units for victims of Appiatse disaster
36 mins -
Stonebwoy’s The Livingstone Foundation surprises talented autistic boy with gifts
41 mins -
NPP should’ve referred Kingsley Nyarko’s bribery allegation to the police – Inusah Fuseini
50 mins -
Police pursue gunmen for killing 2 off-duty officers at Trasacco
2 hours -
Bayer Leverkusen beat Roma to win semifinal first leg
2 hours -
Aston Villa face tough task after 2-4 defeat to Olympiacos
2 hours -
NGO empowers women and girls with disabilities
2 hours -
Guinness World Records: Nigerian woman paints nails for three days
2 hours -
Season 2 of ‘I’m in Love with Boma Ye’ returns this May on Joy Prime
2 hours -
Akufo-Addo’s disrespect of chiefs won’t be tolerated – Haruna Iddrisu
2 hours -
Chalobah and Jackson score as Chelsea defeat Tottenham
2 hours -
NPP praises Police, EC for successful Ejisu by-election
2 hours -
2024 Ramadan Cup: Bawumia donates 20,000 to four teams as Ashaiman lifts trophy
2 hours -
PMI Ghana Chapter members tour Kasoa BSP Project
2 hours