{"id":263500,"date":"2024-12-09T13:54:50","date_gmt":"2024-12-09T13:54:50","guid":{"rendered":"https:\/\/www.ghanamma.com\/2024\/12\/09\/2025-bond-market-poised-for-recovery-as-t-bill-yields-decline\/"},"modified":"2024-12-09T13:54:50","modified_gmt":"2024-12-09T13:54:50","slug":"2025-bond-market-poised-for-recovery-as-t-bill-yields-decline","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2024\/12\/09\/2025-bond-market-poised-for-recovery-as-t-bill-yields-decline\/","title":{"rendered":"2025 bond market poised for recovery as T-bill yields decline"},"content":{"rendered":"

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\"Investor Investor confidence in the fixed-income market is expected to strengthen further in 2025<\/span><\/span><\/p>\n<\/div>\n

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Investor confidence in the fixed-income market is expected to strengthen further in 2025, driven by declining Treasury bill (T-bill) yields and improving macroeconomic conditions.<\/p>\n

This follows a year of gradual recovery in 2024, with government making significant strides in stabilising its fiscal position and rebuilding trust in the domestic bond market.<\/p>\n

Databank\u2019s fixed-income market outlook for 2025 projects a continued recovery in the bond market, underpinned by foreign investors\u2019 cautious return and a strategic pivot by government toward longer-dated securities.<\/p>\n

As of last week, yields on Treasury bills continued to inch higher, with the 91-day bill around 27.36 percent. Similarly, the 182-day bill is at 28.1 percent while the 364-day bill stands at 29.88 percent.<\/p>\n

The report highlights the importance of T-bill yield compression in facilitating this transition.<\/p>\n

\u201cThe realisation of our expectation will largely depend on the pace and depth of yield decline across Treasury bills, which continue to offer competitive returns to investors,\u201d Databank noted.<\/p>\n

The easing monetary policy stance expected in 2025, coupled with inflationary pressures waning, is likely to create a conducive environment for lowering borrowing costs.<\/p>\n

Shift toward longer-term Securities<\/b><\/p>\n

Government is expected to borrow approximately GH\u00a2200billion from the T-bill market in 2025, a reduction from the estimated GH\u00a2220billion in 2024. This translates to a lower average weekly uptake of GH\u00a23.9billion compared to GH\u00a24.2billion in the previous year.<\/p>\n

Databank predicts that the reduced reliance on short-term borrowing will be facilitated by improved access to alternative funding sources and sustained recovery in macroeconomic indicators.<\/p>\n

Treasury demand for money market funding is expected to decline significantly, allowing for a potential reduction of high T-bill yields. However, this pivot is likely to gain momentum after the first quarter of 2025 due to refinancing needs tied to high T-bill maturities from the latter half of 2024.<\/p>\n

Policy measures to compress T-bill yields<\/b><\/p>\n

Despite a projected dovish monetary policy stance, Databank anticipates that investor response to T-bill yield compression will be delayed until mid-2025. Significant policy measures aimed at reducing sovereign borrowing costs will play a pivotal role in bringing down yields, which currently hover at around 27 percent.<\/p>\n

Government has signalled its intention to reduce reliance on money market funding and explore longer-term financing options. These measures, combined with easing inflation and liquidity-enhancing policies \u2013 such as reversing increased cash reserve requirements for banks, are expected to create a favourable environment for bond issuances.<\/p>\n

Reopening the domestic bond market<\/b><\/p>\n

Government\u2019s plan to reopen the domestic bond market for non-resident investors as early as 2025 marks a bold step toward accelerating economic recovery. This follows the completion of Ghana\u2019s Domestic Debt Exchange Programme (DDEP) in September 2023.<\/p>\n

According to Samuel Arkhurst, Director-Treasury and Debt Management, Ministry of Finance, the reopening aligns with fiscal strategy and signals confidence in the country\u2019s economic prospects.<\/p>\n

\u201cThe last time we issued a bond was in September 2022, well before the DDEP launch in January 2023. We completed the entire process by September 2023,\u201d Mr. Arkhurst stated in an earlier media briefing.<\/p>\n

Typically, countries undergoing debt restructuring take two \u2013 four years to regain access to their domestic bond markets. However, Ghana\u2019s near two-year timeline underscores government\u2019s determination to expedite its recovery objectives.<\/p>\n

Investor confidence and sovereign ratings<\/b><\/p>\n

In 2024, the restructuring of Eurobonds contributed to slight improvements in the nation\u2019s sovereign credit ratings \u2013 with Fitch upgrading the country to CCC+ and Moody\u2019s to Caa2. These upgrades, coupled with declining inflation and a cumulative 300-basis-point reduction in the monetary policy rate, bolstered investor confidence in government securities.<\/p>\n

Money market instruments remained the dominant asset class in the Ghana Fixed Income Market (GFIM) throughout 2024, offering higher returns than longer-dated securities.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Investor confidence in the fixed-income market is expected to strengthen further in 2025 Investor confidence in the fixed-income market is expected to strengthen further in 2025, driven by declining Treasury bill (T-bill) yields and improving macroeconomic conditions. This follows a year of gradual recovery in 2024, with government making significant strides in stabilising its fiscal […]<\/p>\n","protected":false},"author":1,"featured_media":263501,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-263500","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"yoast_head":"\n2025 bond market poised for recovery as T-bill yields decline - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2024\/12\/09\/2025-bond-market-poised-for-recovery-as-t-bill-yields-decline\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"2025 bond market poised for recovery as T-bill yields decline - Ghanamma.com\" \/>\n<meta property=\"og:description\" content=\"Investor confidence in the fixed-income market is expected to strengthen further in 2025 Investor confidence in the fixed-income market is expected to strengthen further in 2025, driven by declining Treasury bill (T-bill) yields and improving macroeconomic conditions. 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