INVESTOR confidence in the country’s capital market will receive a significant boost with the government’s planned issuance of new local bonds, analysts have said.
The move, according to them, comes at a time when liquidity in the domestic debt market remains constrained, and renewed activity is urgently needed to deepen market participation.
On March 26, the government signalled its intent to return to the domestic bond market, providing fresh details on the structure, issuance process and trading of the securities under its new Treasury Bond programme.
The development forms part of efforts to reestablish a stable domestic borrowing programme following the country’s recent debt restructuring, which is expected to rebuild investor confidence and deepen the country’s domestic debt market.
Analysts
The analysts – A Finance and Tax Analyst, Nelson Cudjoe Kuagbedzi, and Economist, Professor Peter Quartey, who spoke to the Graphic Business, called on the government to adopt a deliberate and transparent approach as it sought to re-enter the domestic bond market, following years of reliance on Treasury bills.
They said the bond issuance presented significant investment opportunities, especially for Treasury instruments and other government securities, adding that if the issuance succeeds, it could mark a turning point in restoring confidence and revitalising trading activity in Ghana’s local bond market.
Also, Banking and Financial consultant, Dr Richmond Akwasi Atuahene, described the re-entry into the domestic bond market as a high-stakes gamble that could either pave the way for genuine economic recovery or lead the country back into a prolonged debt crisis.
He views the re-entry as neither inherently good nor bad. “It depends on whether the government sees this as the end of reform or its true beginning,” he said.
“Ghana has the technical capacity and policy tools to succeed – the question is whether there is the political will to make the tough choices,” Dr Atuahene added.
On the positive side, he highlighted the improved macroeconomic backdrop that made the re-entry possible.
“Inflation has dropped dramatically to 3.3 per cent, treasury bill rates are down to around 10.7 per cent, and the government has honoured all coupon payments on restructured bonds, including a significant US$909 million cash payment in February,” he stated.
Those gains, he said, signalled restored credibility and created a window for sustainable debt management.
In an exclusive interview with the Graphic Business, Dr Atuahene stressed that success hinged on aggressive reforms: strengthening revenue through digital taxation and reduced exemptions, rationalising expenditure, reforming the energy sector with cost-reflective tariffs, and tackling corruption decisively.
“Corruption has cost Ghana billions that could fund development,” he said. “We need specialised courts, stronger prosecutorial powers, and real deterrence to change behaviour.”
However, he cautioned that the move carried substantial risks.
Ghana faces massive repayment obligations from the Domestic Debt Exchange Programme (DDEP) restructuring, with about GH¢150.3 billion due over the next four years – roughly 11.6 per cent of GDP – including peaks of GH¢57.6 billion in 2027 and GH¢52.5 billion in 2028.
“These are compounded by external debt service pressures of around US$8.7 billion in the same period,” Dr Atuahene said.
Investor confidence
Mr Kuagbedzi explained that the government’s relatively strong credit standing was likely to draw both local and institutional investors back to the market once the bonds are launched.
“Given the government’s consistent track record of honouring its obligations, including coupon payments and matured bonds, we expect strong participation, particularly from pension funds and other long‑term investors,” Mr Kuagbedzi said.
He said the DDEP bonds were currently trading around 10 per cent, while inflation stood at 3.3 per cent.
Based on these dynamics, Mr Kuagbedzi anticipates that the new bonds will be priced in a similar range, likely not exceeding 10 per cent.
“Investors should, therefore, not expect significantly higher yields. This development is positive for the market. It will enhance market activity, improve liquidity and contribute to the deepening of Ghana’s capital markets,” he said.
On risks, Mr Kuagbedzi said there are no immediate sustainability concerns, provided the government maintains its creditworthiness and continues to meet its obligations.
Significance
Prof. Quartey, who is a former Director of the Institute of Statistical, Social and Economic Research (ISSER), said the government’s inability to access the local bond market, particularly after the DDEP, had made the return significant, noting that bonds would be crucial for funding infrastructure projects and other key expenditures.
“Given the lingering effect of the DDEP on investor confidence, the government must rethink its bond issuance strategy.”
“Investors must clearly understand how funds will be used, how efficiently they will be managed, and, most importantly, how repayment will be guaranteed when the bonds mature,” Prof. Quartey told the Graphic Business.
On the likelihood of success, the economist said confidence was gradually returning, though full investor trust could not be assumed yet.
“While some hesitation remains, with the right measures, the government can successfully re-enter the market,” he said.
He stressed the need for careful interest rate determination, stating that “rates must be attractive enough to draw investors without worsening the debt burden. Both medium-term five-year bonds and longer ten-year instruments require careful analysis to strike the right balance.”
He further highlighted the importance of efficiency in public investment, noting that about 40 per cent of public sector projects were inefficient.
Therefore, he said, ensuring productive and transparent use of borrowed funds would rebuild trust and improve outcomes.
“Investors will only commit funds if there are strong assurances regarding transparency, efficiency, and repayment,” he added.
Deeper fiscal reforms needed
Dr Atuahene also warned that the repayment humps of the DDEP in 2027 and 2028 were significant and could pose a threat if not handled prudently.
He expressed concern that without deeper fiscal reforms, new borrowing might simply finance recurrent expenditure rather than productive investments, perpetuating debt overhang similar to cases in Argentina or Greece.
The banking consultant also pointed to persistent structural issues: weak revenue mobilisation (with 2025 collections missing targets), a public sector wage bill consuming over 44 per cent of domestic revenue, and contingent liabilities in energy (including IPP debts), roads, and state-owned enterprises that could materialise as fiscal shocks.
Context
The government has stated that it will return to issuing long-term domestic bonds in March, ending a three-year hiatus after the 2022 sovereign debt default that gave rise to a debt exchange programme.
The aim is to raise funds through longer-dated instruments to finance programmes, including under the “Big Push” initiative targeting GH¢10 billion in 10- and 15-year tenors to support infrastructure and reduce reliance on expensive short-term Treasury Bills.
In a brief issued by the Ministry of Finance on March 26, 2026, it said under the programme, the government would issue senior unsecured treasury bonds denominated in Ghana cedis, with specific tenors and issue sizes to be announced ahead of each auction.
Also, investors will be required to submit a minimum bid of GH¢50,000, with additional investments in multiples of GH¢1,000.
According to the ministry, the coupon rate would be determined through an auction process, while interest will be paid on a semi-annual basis.
It added that the bonds were expected to be redeemed through a bullet repayment at maturity, unless otherwise specified in future issuance documents.
Source:
www.graphic.com.gh
