Secondary market activity surges as valuation issues find resolution
Secondary activity witnessed a significant surge last week, achieving its highest traded volume since the settlement of the new bonds. The total traded volumes skyrocketed from GH117.11million to GH459.34million, showcasing a remarkable increase. Marketparticipants who had been grappling with valuation challenges concerning the Payment In Kind (PIK) component of the new bonds finally found a resolution, leading to an upsurge in activity.
The majority of trading activity centred on the new bonds, accounting for approximately GH398.63million; which represents a substantial 97.31 percent week-on-week rise. The trading predominantly focused on short- to medium-term papers, with notable attention given to the actively traded Feb-2027 (CPN: 8.35 percent) bond, clearing at a yield of 9.26 percent. Additionally, the Feb-2028 (CPN: 8.50 percent) bond settled at 9.42 percent. Therobust secondary market activity is a positive development for investors and market watchers, who have been eagerly awaiting the resolution of valuation issues. Apakan Securities expressed optimism in its market analysis, saying, "We expect market activity to pick up as valuation issues have been resolved."
This sentiment aligns with broader market expectations, as investors anticipate a more vibrant secondary market in the weeks to come. The robust trading volumes, coupled with the strong performance of short- to medium-term bonds, indicate a market poised for growth.
Constant Capital provided a review of the market, commenting: We expect a quiet session this week while the market awaits the inflation reading for April 2023, which we anticipate will show a decline in the CPI print. Coupon pay-outs on selected old bonds scheduled for this week could also fuel market liquidity. This cautious outlook reveals that investors are closely monitoring economic indicators and potential market drivers.
Turning to the primary market, rising money market yields have rekindled investor interest in government bills. The results of past buildings have made the CHEMENT production of the amount of six funds. The investors submitted the dancing amount of 8,57 billion , more than 1.83 Billion is not to 40%. The government successfully sold enough Treasury bills to cover the maturing face value (FV) of GH1.75billion across all the bills. Notably, the 91-day bill experienced a 31-basis-point increase, reaching 20.26 percent; while the 182-day bill rose by 12 basis points to 22.83 percent. Similarly, the 364-day bill inched up by 10 basis points to 27.36 percent.
With GH2.31billion in maturing FV due next week, the government aims to raise GH3.33billion this week through the same range of bills. The differential between the size of the target and the maturation value amounts to 1.03 billion GH , indicating the increased funding needs of the government on the money market. Consequently, analysts provide that yields on treasurybills will continue to increase during the next auction, helpingthe government to achieve its financial objectives.
In the primary market, rising money market yields continue to attract investors to government bills. The oversubscription of Treasury bills for the sixth consecutive week demonstrates the strong demand for these instruments. A successful government campaign, more than the target size, shows the confidence of investors among the limited options and provides the necessary funds to cover the mature face value of Treasury bills.
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