Analysis of Ghana's sovereign and corporate bonds, and pension fund

Ghana’s debt market shows an interesting picture of growth and change, especially in the past five years to 2018. A major fillip to this growth is the government’s use of the debt market as one of the major platforms for raising domestic debt to support its yearly budgetary shortfalls. Similarly, private investor participation in the market has increased given the rewarding interest rates and perceived non-existent risk. An analysis of government bonds, corporate bonds and the pension fund will help further explain the preference for debt.

Government Bonds

The Ghana Stock Exchange (GSE) commemorative registered stock, which was issued to launch the GSE in 1990, became the lone stock on the market until 1999, with as little as five bonds issued over that period. However, the market has seen a turn in recent times, with the government becoming the largest issuer of debt securities on the capital market. Its debt raising activities were highlighted by the issuance of its maiden eurobond in 2007, with a par value of $750m for a tenor of 10 years. The government has since raised other eurobonds, including the recent issue of a $1bn bond of 10- and 30-year tenors in 2018 oversubscribed, partially due to a credit rating upgrade. The total outstanding local bonds issued by the government as of August 2018 was worth roughly GHS58bn ($12.5bn). High returns, low risk and few attractive alternatives have underpinned this growth.

Corporate Bonds

The corporate debt market has seen significant expansion since around 2014, with a total of GHS6.6bn ($1.4bn) raised as at August 2018, and a total shelf registration of GHS11.8bn ($2.6bn) by 10 corporate institutions. These corporate bonds are spread between financial institutions, real estate companies, and energy and commodity-buying companies. Of the total raised, GHS5.7bn ($1.2bn) worth of bonds were issued by the Energy Sector Levy Act (ESLA), a special-purpose vehicle set up by the government to raise funds to address energy sector debts. The longest-dated corporate bonds are the 10-year ESLA bonds and the 10-year bonds issued by local oil and gas company Quantum Terminals, which is listed on both the GSE and on the London Stock Exchange. These corporate bonds are highly subscribed by private fund managers due to the limited availability on the market and the attractive margins.


The introduction of the 2008 National Pensions Act and the establishment of the National Pensions Regulatory Authority led to the birth of occupational pension schemes, a provident fund, personal pensions and other privately managed pension schemes. Prior to this, the Social Security and National Insurance Trust was the largest investor in both Ghana’s equity and debt markets. Due to the increased activity spurred by the development in pensions and bonds, the amplified need to trade bond securities locally led to the establishment of the Ghana Fixed Income Market in 2015. This facilitated secondary market activities and provided liquidity to the market; debt securities are also traded on the Bloomberg platforms. There have been enormous trading activities on Ghana’s secondary market recording rapid growth from 2015 to 2018. The total volume of securities traded in 2015 grew by 76% from about GHS10.4bn ($2.2bn) to around GHS18bn ($3.9bn) in 2016. The figured reached GHS32bn ($6.9bn) in 2017, before dropping to GHS27.5bn ($5.9bn) in August 2018.

Path Ahead

The Ghanaian debt market is still growing and undergoing a lot of innovation and changes. The market needs to shift from plain vanilla debt instruments to more diversified products, such as mortgage-backed bonds, municipal and local government bonds, and collateralised loan obligations, to access funds from the rapidly growing pensions industry.

Regulators, such as the Securities and Exchange Commission, need to be more proactive to meet the needs of the market and employ efficient technology in the execution of its activities. Listing processes should be swift and less laborious to encourage firms that seek to undertake projects to consider raising debt.

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