Domestic Debt payments could boost bond market interest — Merban Capital
By Praisebell Rosemond Larbi
The successful settlement of coupon payments under the Domestic Debt Exchange Programme (DDEP) has positioned government to attract investor participation should it move to reopen the domestic bond market, according to investment advisory firm Merban Capital.
On Tuesday, 19 August 2025, government disbursed GHS9.7 billion in coupon payments to bondholders, bringing total settlements under the programme so far this year to GHS19.4 billion.
Commenting on the development, Nelson Cudjoe Kuagbedzi, Head of Finance at Merban Capital, said the move has reinforced market confidence in Ghana’s debt servicing record and could shift investor interest from Treasury bills to longer-term government bonds.
“Government credibility will shore up. If the government decides to go back and borrow from the capital market in terms of issuing new bonds, I don’t think investors will have any problem going there,” Mr Kuagbedzi said.
He noted that despite recent undersubscriptions in Treasury bill auctions, falling interest rates and government’s demonstrated commitment to honouring its coupon obligations would encourage investors to pivot towards bonds.
“Treasury bill rates have fallen sharply. For the past two auctions, government has registered undersubscription. With government showing this level of commitment by paying coupons, when they begin to issue new bonds you will realise that most investors will move away from the Treasury bill market to the bonds market,” Mr Kuagbedzi explained.
He further argued that bond issuance gives government more breathing space to manage repayments compared to Treasury bills, which carry frequent rollover pressures.
“This is also good news for government because with bonds, government has enough time to prepare and pay, unlike Treasury bills that mature frequently and must be refinanced,” Mr Kuagbedzi added.
The DDEP, introduced in late 2022 as part of Ghana’s IMF-supported debt restructuring plan, was designed to ease the government’s short-term repayment burden and restore debt sustainability.
The Ministry of Finance, in a statement, said the latest payout reflects government’s unwavering commitment to honouring agreements with investors under the exchange framework. Officials stressed that the move is expected to bolster investor trust and strengthen Ghana’s fiscal credibility.
As part of measures to guarantee future debt service, government has also established two dedicated sinking fund accounts: a Cedi Sinking Fund Account and a US Dollar Sinking Fund Account, in line with the 2025 Mid-Year Fiscal Policy Review and the Public Financial Management Act, 2016 (Act 921), as amended.
These funds will act as liquidity buffers to ensure timely redemption of bonds maturing in 2026, 2027 and 2028.
The Finance Ministry further assured investors and the public that all subsequent debt obligations, including those under the DDEP, will be honoured fully and on schedule.
