Government bond yields fell significantly across all maturities in the first half of 2025, reflecting strengthening investor sentiment amid easing inflation and stabilizing macroeconomic indicators.
Data from the Bank of Ghana shows the sharpest compression at the shorter end of the curve, with the 4-Year Bond yield dropping 686 basis points to 19.36% between January and June.
Medium- to long-term bonds followed suit: the 5-Year, 6-Year, 10-Year, and 15-Year bonds declined to 20.21%, 19.17%, 20.08%, and 20.74% respectively.
This broad-based rally marks a notable reversal from the volatility following the 2023 Domestic Debt Exchange Programme (DDEP), which restructured local debt instruments.
Yields had peaked in September 2024—reaching 35.61% for the 4-Year Bond—before trending downward as inflation expectations improved and fiscal discipline under Ghana’s IMF program gained credibility.
The narrowing spread between short- and long-dated bonds, now at 138 basis points compared to 500 a year earlier, signals growing market confidence.
Republic Investment CEO Madeline Nettey attributes part of the momentum to anticipation of a sovereign bond buyback, noting discussions with new bookrunners are underway for potential Q3 action.
“A buyback would align portfolios with strategy, especially for funds holding long-dated bonds acquired involuntarily during restructuring,” she stated.
While lower yields have reduced government borrowing costs and eased interest payment pressures, some traders caution that demand may stem from scarce alternatives rather than deep conviction in long-term reforms.
The stabilization could nonetheless spur corporate issuance and private credit growth, contrasting sharply with the erratic post-DDEP environment.
