Foreign investors’ holdings of cedi bonds down for five straight months
Data from the Central Securities Depository (CSD) indicate that offshore holdings declined to GHC28.65 billion in March 2022 – down by 0.27% quarter on quarter (q/q) from December 2021
For a straight five-month period, foreign investors’ holdings of cedi denominated bonds continued a decline: reaching GHC28.65 billion at the end of 2022 first-quarter since it peaked in August 2021 at GHC34.04billion, as market volatility persisted.
Reprofiling of debts to medium-term tenors
Apakan Securities Limited, in its first-quarter perusal of the market, indicated that presently the market preference is geared toward medium-term securities.
Accordingly, government’s debt profile has shifted toward the medium-term tenors – thus two years to seven years, as issuances have been tilted toward those tenors to suit the market interest and match investor preference so as to attract sufficient demand.
This accounted for a 1.20% q/q increase in medium-term tenors to 64.14%, while the short-term papers – 91-to 364-day bills – dropped by 0.40% to 14.61%. The longer-dated papers similarly dipped 0.80% q/q to 21.25%.
“Should investor confidence remain dampened amid revenue underperformance through the year and elevated inflation prompting a hawkish monetary policy stance by the central bank, movements in local currency (LCY) bond yields may remain tilted to the upside as market players reprise their assets to reflect the inherent risks in the economy. Consequently, government’s cost of financing could remain on the upside through the year,” Apakan said.
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