Ghana’s fixed income market recorded yields as low as 16.04 percent on new government bonds November 7, marking a dramatic reversal from the 35 percent crisis rates of 2022 and delivering fiscal relief that could save taxpayers billions in annual interest payments.
The Ghana Fixed Income Market (GFIM) trading report showed total transactions worth GH¢177.78 million across 97 deals, with treasury bills dominating at GH¢108.04 million through 80 separate trades. New Government of Ghana (GoG) notes and bonds attracted GH¢8.80 million in four transactions, while sell and buy back trades involving government securities reached GH¢60.54 million across 11 deals.
The largest single trade involved a February 2027 maturity bond worth GH¢7.77 million yielding 16.04 percent at a closing price of 91.36. Old government bonds saw minimal activity at GH¢402,982 through two trades, with a September 2027 bond recording the highest old paper yield at 22.01 percent, reflecting market differentiation between restructured and legacy securities.
Treasury bills captured the heaviest volume, with a July 2026 maturity instrument drawing GH¢35.87 million across 11 transactions at 91.92 closing price. The concentration in short term government securities demonstrates investor preference for liquid, low risk instruments during Ghana’s ongoing economic stabilization.
The yield environment represents extraordinary compression from December 2022, when 91 day and 364 day treasury bill yields peaked at 36.18 percent and 36.10 percent respectively following announcement of the Domestic Debt Exchange Programme (DDEP). Those crisis rates reflected investor panic as Ghana lost international market access and turned aggressively to domestic financing amid soaring inflation and currency collapse.
Government implementation of interest savings measures during March 2023 treasury bill auctions triggered sharp rate declines. The 91 day bill rate dropped by 1,667 basis points to 18.88 percent, while the 364 day rate fell by 855 basis points to 25.66 percent. Despite temporary rebounds, rates continued trending downward through 2024 and into 2025 as economic conditions stabilized.
Within the first 50 days of President John Mahama’s administration, the 91 day treasury bill rate dropped from approximately 28.34 percent to 20.79 percent, while 182 day and 364 day rates fell from 28.96 percent to 22.98 percent and from 30.17 percent to 22.69 percent respectively. This represented between 600 to 760 basis points of compression across different maturities.
The Ministry of Finance described this as a historic event, compressing a level of rate moderation that would typically unfold over several quarters into mere weeks. The rapid adjustment underscores both the magnitude of preceding financial stress and the credibility boost delivered by the new administration’s fiscal messaging.
For Ghana’s treasury, the implications are profound. Lower borrowing costs directly reduce debt servicing obligations that had consumed increasingly large portions of government revenue. Ghana will borrow approximately GH¢200 billion from the treasury bill market in 2025, down from an estimated GH¢220 billion in 2024, with substantially lower interest charges on each cedi borrowed.
The fiscal mathematics tell a compelling story. At 35 percent yields, every GH¢1 billion borrowed costs GH¢350 million annually in interest. At 16 percent yields, that same borrowing costs just GH¢160 million, generating GH¢190 million in annual savings per billion borrowed. Across Ghana’s domestic debt stock, such compression could free billions for development spending rather than debt service.
However, the yield collapse creates severe challenges for savers and institutional investors. Inflation remains at 23.1 percent as of February 2025, meaning investors experience negative real returns. Based on recent auction results, the 91 day treasury bill delivers negative real returns of 7.36 percent, while the 364 day bill shows negative real returns of 4.25 percent.
This erosion of purchasing power hits pension funds, insurance companies, and individual savers particularly hard. Retirees who structured portfolios around 30 percent treasury bill yields now face dramatically reduced income streams precisely when inflation remains elevated. The sharp reduction in returns may reduce overall portfolio performance for investors who historically relied on high yielding treasury bills for relatively safe returns.
Market auctions have been characterized by substantial oversubscriptions, with a recent sale attracting bids amounting to GH¢20.5 billion, 140 percent above the targeted issuance, while government accepted only GH¢9.6 billion. The rejection of GH¢30 billion in bids signals that massive liquidity remains within the banking sector seeking deployment opportunities.
This robust appetite despite declining yields suggests investors view improved fiscal outlook and political stability as worth accepting lower returns. The shift marks a notable change from 2022 turbulence, when the 91 day treasury bill rate surged beyond 35 percent amid extreme inflationary pressures and debt distress.
The ability of government to refinance existing obligations smoothly and at significantly lower rates without triggering market volatility demonstrates marked improvement in Ghana’s financial conditions. Liquidity in the financial sector has remained stable, reinforcing arguments that the rate decline has not disrupted market equilibrium.
Old government bonds trading at 22.01 percent yields, compared to 16.04 percent for new paper, reflects market segmentation created by the DDEP. Investors who held pre restructuring securities and exchanged them for new instruments under more favorable government terms now see those older bonds trading at significant yield premiums, indicating perceived credit differentiation between various vintages.
Corporate bond trading remained essentially nonexistent in the November 7 session, consistent with historical patterns in Ghana’s developing capital markets. When government bonds offer 15 to 16 percent returns, corporate issuers must price significantly higher to compensate for perceived additional risk, making debt financing economically questionable for private sector borrowers.
Zero activity in collateralized repo and Global Master Repurchase Agreement (GMRA) trades indicates these sophisticated financing tools have not yet integrated into Ghana’s fixed income infrastructure despite their prevalence in more developed markets. The repo market demonstrated only selective activity in sell and buy back trades concentrated in longer dated government bonds.
Ghana’s bond market has earned international recognition for its innovation and transparency, marking one of the most significant milestones in the country’s capital markets development, according to Abena Amoah, Managing Director of the Ghana Stock Exchange. She noted that investor confidence has surged thanks to regulatory enhancements including introduction of clear GFIM rules and robust oversight frameworks.
The market has become one of the most liquid in Sub Saharan Africa outside of South Africa and Nigeria, Amoah stated at the media launch of the 10th anniversary of the Ghana Fixed Income Market. She emphasized that the next decade would be shaped by deeper corporate market development, sustainable finance instruments, regional integration, and technology innovation.
The yield structure reveals significant differentiation between security vintages, with older government securities trading at yields approaching 24.80 percent. This spread underscores impact of Ghana’s debt restructuring program, where older securities were exchanged for new instruments under more favorable terms to government.
Bank of Ghana bills showed moderate activity, serving as important monetary policy tools and providing additional short term investment options for institutional investors seeking government backed securities. These central bank instruments complement treasury bills in offering liquid parking options for institutional cash management.
The trading activity occurs against a backdrop of Ghana’s economic recovery efforts following its debt restructuring program. The country completed the first phase of DDEP in March 2023, exchanging domestic bonds held by local institutions for new securities with extended maturities and modified terms designed to reduce immediate debt servicing pressures.
As of January 20, 2025, the 91 day and 182 day treasury bill yields rose by eight basis points and one basis point, reaching 28.42 percent and 28.97 percent respectively, while the 364 day bill recorded an 11 basis point increase to settle at 30.29 percent. The subsequent dramatic decline to current levels around 16 to 20 percent demonstrates extraordinary volatility in Ghana’s short term rates.
Analysts project that improved access to international funding and recovering macroeconomic indicators could enable government to pivot toward longer term financing options. However, refinancing needs from high uptake in the second half of 2024 may keep demand for short term funding elevated throughout the first quarter of 2025.
The Monetary Policy Committee’s decisions continue influencing market dynamics through interest rate policy. Persistent inflationary pressures, evidenced by rising consumer inflation from 21.5 percent in September 2024 to 23.8 percent in December 2024, created expectations of further policy rate adjustments to stabilize prices and restore macroeconomic stability.
Lower treasury bill yields may reduce foreign investor interest, particularly as they seek higher returns elsewhere. This could result in capital outflows, increased demand for foreign currencies, and potentially contribute to depreciation of the Ghana cedi. Currency stability remains critical for maintaining inflation control and preserving the real value of cedi denominated investments.
The shift in investor interest away from low risk government securities could potentially fuel growth in the stock market, with the Ghana Stock Exchange already delivering a 26.42 percent year to date return. Redirected capital toward the private sector could stimulate growth and job creation, while lower rates may reduce lending rates across the banking sector, potentially boosting borrowing by businesses and consumers.
The yield compression story represents both fiscal triumph and investor challenge. Government celebrates dramatically reduced borrowing costs that ease budget pressures and free resources for development priorities. Savers and institutional investors face portfolio income reductions and negative real returns that erode wealth preservation strategies built during the high yield environment.
For Ghana’s economic managers, maintaining this delicate balance between fiscal sustainability and investor returns will define success in the post DDEP recovery phase. The market’s willingness to accept lower yields signals confidence in improved governance and economic management, but that confidence depends on sustained policy discipline and inflation moderation.
The November 7 trading session captures this transformation in microcosm. Modest volumes, compressed yields, government paper dominance, and corporate market dormancy paint a picture of markets adjusting to new realities where crisis premium yields have given way to more normalized, though still elevated, borrowing costs reflecting Ghana’s ongoing recovery trajectory.