Investment market crave for longer term bonds

The investment market in Ghana is craving for longer term bonds.

This was revealed by the Chief Executive Officer (CEO) of the Ghana Home Loans Dominic Adu to the B&FT.

This follows the successful issuance of the ten-year domestic treasury bond. Adu said most industry players are expecting that government would lead the way.

“If the government has a 50-year bond, we can provide a 50-year mortgage, which means you could be paying about 30percent of what you will be paying under a 10-year mortgage, and that immediately increases affordability.”

He explained that long-term bonds allow you plan and “undertake long term projects”.

“I think the 10-year bond is fantastic and it is long in coming. I would like to see 30 year bonds in my life; that is common elsewhere.”

Adu opined that “you cannot take long term projects, especially social projects, on 91-day rolling bills or bonds. It is almost like living on an overdraft and nobody wants to live on overdraft. Like every business, after sometime you convert your overdraft into a long-term loan.”

The market is already responding positively to the ten-year GH¢438 million bond. This has reduced the rates on short term debt, including Treasury Bills and bonds.

The CEO of Ghana Home Loans said the government must be more daring because “you can’t continue to borrow on 91-day or two-year periods; you are repeating the same exercise all the time, it is not worth it.”

In a related development the Deputy Managing Director of the Ghana Stock Exchange, Ekow Afedzie, said this was long overdue. He argued that “longer dated bonds are better for the economy at lower rates.”