Bond Market Turnover Falls 38.27%

By Praisebell Rosemond Larbi

Activity in Ghana’s secondary bond market weakened over the week, with total turnover declining sharply by 38.27 percent week-on-week to GH¢3.94 billion, reflecting a cautious investor environment marked by restrained risk appetite and limited willingness to extend duration.

The slowdown in trading underscores a broader trend of conservative positioning in the fixed-income market, as investors continue to prioritise capital preservation, liquidity, and yield visibility over longer-term commitments. Market participants remain wary of duration risk, particularly in the context of evolving macroeconomic conditions, fiscal financing needs, and uncertainty around the medium-term interest rate trajectory.

Despite the overall decline in turnover, trading activity remained highly concentrated in the short-to-medium segment of the yield curve. Bonds maturing between 2027 and 2030 dominated market flows, accounting for 68.8 percent of total traded volumes during the week. These securities traded at a weighted-average yield of 14.25 percent, reflecting sustained demand for instruments offering a balance between relatively attractive yields and shorter maturity risk.

The strong preference for this segment suggests that investors are positioning defensively, opting for maturities that provide reasonable returns while allowing flexibility to respond to future shifts in inflation dynamics, monetary policy decisions, and government borrowing patterns.

The mid-curve segment, comprising bonds with maturities between 2031 and 2034, also recorded notable participation, representing 25.4 percent of total trading volumes. These bonds were transacted at a weighted-average yield of 15.05 percent, marginally higher than shorter tenors, but still insufficient to attract more aggressive positioning from investors seeking to limit exposure to longer-dated securities.

By contrast, activity at the long end of the curve remained subdued, highlighting persistent investor reluctance to lock in capital over extended periods. Bonds maturing between 2035 and 2038 accounted for only 5.8 percent of total turnover, trading at a higher weighted-average yield of 15.57 percent. The limited participation at these tenors indicates that the yield premium on offer has yet to adequately compensate investors for perceived duration and reinvestment risks.

According to Databank Research, trading activity in the bond market is expected to remain soft in the near term, as investors continue to adopt a wait-and-see approach. The research firm noted that market participants are deliberately staying cautious on duration and maintaining a clear preference for the short end of the yield curve, where liquidity is deeper and price volatility is relatively contained.

Databank further observed that until there is greater clarity on inflation trends, fiscal consolidation efforts, and the broader macroeconomic outlook, investor behaviour is likely to remain defensive. As a result, turnover levels may continue to be restrained, with trading largely driven by tactical positioning rather than long-term strategic allocation.

Overall, the latest performance of the secondary bond market reflects a phase of consolidation, with investors balancing yield opportunities against prevailing economic risks, and signalling a market that remains cautious, selective, and highly sensitive to policy and macroeconomic signals.