The Executive Chairman of Databank Group, Ken Ofori Atta is attributing the recent boost in the performance of bonds on the Ghana Stock Exchange (GSE) to the impact of both local and external factors.
Hitherto, trading in bonds including governments 2 to 5 year bonds listed on the exchange had not seen much activity over the years.
Results from the second issue of government’s 3-year fixed rate bond however showed an oversubscription of 130 percent after a total subscription of 690 million Ghana cedis as against the offer of 300-million Ghana cedis which lasted for only a day.
Ken Ofori Atta said major policy decisions by the Bank of Ghana coupled with the prospects of the oil and gas industry largely underpins this positive performance in bonds in recent times.
According to him “the Bank of Ghana reduced the prime rates and the Treasury Bill rates are going down and what they are trying to do in effect is to correct the yield curve so that the long dated bonds will have a higher return and a short end but you also realize that with the recapitalization of the banks, they have a lot more resources than currently the rate at which they are offering loans or advances to industry which means that there is excess capital to invest in instruments in such as the bank is given.”
“The reserves are now I think about three billion dollars. Now everybody is also looking at oil as a stop gap and Ghana seems to be a stable investment destination.”
Meanwhile, The International Monetary Fund (IMF) says the Global stock market which is recovering slightly has been hit badly by fears that the financial crisis in Greece could spread throughout Europe.
Mr. Ofori-Atta further indicated that the attractive rates of government’s bonds are also playing a key role by boosting foreign investor participation.
“Also if you go on the global level with the stability of our currency, currently when you offer things of 10, 12, and 13 percent it’s huge because out there in the market place in the West, we are talking about bonds that are given one and half percent on interest rate so that gives an incredible margin for outside investors to participate.” He noted.