By Kingsley Webora TANKEHkingsley.tankeh@thebftonline.com)
The government showed strong borrowing activity last week, taking in almost all bids totaling GH¢10.09 billion – surpassing its auction goal by 40.68 percent, as per a Weekly Market Update report from Laurus Africa Securities.
According to the report, this injected an additional GH¢3.10billion into government funds, highlighting a calculated approach to building reserves in the face of upcoming debt repayments.
This occurs at a moment when experts are concerned about the country’s debt management, aiming to avoid reaching unmanageable debt levels despite the government preparing for an IMF exit in May and full repayment of national debt.
Demand for Treasury bills decreased slightly towards the end of last year, as interest rates declined and investors sought options offering better returns. Nevertheless, the report stated that investor interest remained strong last week, especially for the 364-day Treasury bill, which made up approximately 46 percent of the total demand.
As a result, the weighted average yield for the tenor rose by 8 basis points to 12.98 percent – with shorter tenors also experiencing minor rises. The yields for the 182-day and 91-day bills were 12.65 percent and 11.19 percent respectively.
“we expect continued demand in the next auction, fueled by system liquidity. however, high t-bill maturities still present potential risks of rising yields,” analysts at laurus africa securities mentioned.
Trading in government securities surged on the Secondary Bond Market, with volumes increasing by 165.46 percent compared to the previous week, reaching GH¢9.34 billion. Demand focused on the shorter to medium end of the local currency yield curve, with the February 2027, 2030, and 2031 bonds drawing strong interest.
The typical secondary market yield fell by 21 basis points to 15.13 percent, indicating positive momentum as investors prepare for the next interest payments.
The Ghana Stock Exchange (GSE) experienced a rise in the equity market driven by liquidity, although the overall index growth was limited. The GSE’s Composite Index increased by 0.04 percent, whereas the Financial Stocks Index saw a more significant weekly gain of 0.39 percent, highlighting investors’ growing interest in financial sectors due to better underlying performance.
Trading volume more than doubled, and the total value traded increased by 110 percent. Advancing stocks outpaced declining ones. The NewGLD ETF surged 10.34 percent following a record high for its underlying asset. CAL and CLYD were also among the top performers, while MTN Ghana was the only stock that fell.
The analyst stated that the cedi remains under consistent pressure in the Forex (FX) market. The Ghanaian official currency continued its downward movement, though at a reduced rate, declining by 1.11 percent versus the US dollar during the previous week. So far this year, the domestic currency has declined by 3.42 percent, currently exchanging at 10.82 to the dollar.
Analysts linked this pressure to increased corporate demand for dollars to restock inventory after Christmas. The Bank of Ghana’s foreign exchange auction, which provided US$250 million, was only 31 percent subscribed – indicating continued demand.
Nevertheless, on the commodities front, cocoa prices fell an additional 6.59 percent to US$4,993 per tonne – reaching a two-year minimum. Meanwhile, gold rose 2.72 percent to US$4,623.20 per ounce, and crude oil increased by 1.48 percent to US$64.28 per barrel, driven by record Chinese imports and positive signs of growing demand in Asia.
Outlook
The Treasury aims to collect GH¢9.83 billion in this week’s auction—a 37.43 percent rise from the previous week—keeping market focus on debt trends and interest rate movements. The analyst pointed out that the combination of ample liquidity, corporate foreign exchange demand, and fluctuating commodity conditions is shaping a week of careful trading across different asset categories.
Provided by SyndiGate Media Inc.Syndigate.info).
