Investor appetite high in cedi-denominated bonds 

The cedi recorded an unchanged year-to-date depreciation against the US dollar last week and started this week well.
“Given the favourable macroeconomic fundamentals we expect foreign appetite for Ghana cedi assets to remain strong which will continue to drive a stable bias on the exchange rate over Q1 2018. In addition, plans to tap global debt markets for US$1bn via a Eurobond sale point to further upside in foreign exchange reserves which climbed 23 percent over 2017 to US$7.6 billion. In all, we expect the Ghana cedi to hover between GH¢4.42-4.5 to US$1 by end-Q1 2018”, the report emphasized.
Presently, the cedi is trading between GHc4.413 and GHc4.418 against the US dollar on the interbank market whilst the forex bureaus are selling it at GHc.4.42.
After riding a bout of volatility in the interbank over December 2017 due to seasonal import demand pressures, the currency has been broadly stable so far in 2018.

The report explained that “Largely reflecting improvements in oil production, Ghana’s economic prospects continue to remain favourable in the near to medium term.”

It added that the successful issuance of the expected Eurobond will strengthen commitment to lower domestic borrowings as contained in the 2018 budget.

It predicted that the 91-day Treasury bill will hover around 13.3 and 13.4 percent. “Given the robust foreign demand on the 5-year GH¢ bond in February, we see scope for further re-openings of the longer dated offerings and sizable compression in both yield and spread along the longer end of the yield curve. We expect short-dated interest rates to remain range bound around 13.3-13.4 percent.”
The 91-day T-bill climbed 0.05 percent from the end of 2017 to 13.37 percent presently while the 182-day T-bill has been largely flat from the end of 2017 at 13.88 percent.
The uptrend in the 91-day T-bill extends a rising pattern since the third quarter of 2017 (up 0.14 percent) and reflects increased net issuances at the segment. Nonetheless, yields remain 0.3 percent below levels in quarter one 2017 implying fiscal savings on interest costs.
Yields on Treasury notes have been varied with the 1-year holding steady at 15 percent while the yield on the 2-year note has declined to 17.2 percent from 17.5 percent at the end of 2017.