The government will borrow about GH¢200 billion from the treasury market in 2025.
This is below the 2024 estimate of GH¢220 billion in 2024, translating to an average weekly uptake of GH¢3.9 billion versus GH¢4.2 billion, respectively.
Databank Research said with improving access to international funding and most macroeconomic indicators showing signs of sustained recovery, the government may likely pivot towards longer-term financing options.
However, this shift is expected to occur after the first quarter of 2025, as the treasury refinancing needs may keep demand for short-term funding elevated while it navigates maturities from high uptake in the second half of 2024.
Fixed income market to bounce back strongly in mid-2025
Meanwhile, the easing inflation and policy measures to compress treasury bill yields is expected to influence the fixed income market strongly in 2025.
Despite anticipated easing inflation and a dovish monetary policy in 2025, Databank Research said it expects investor response to yield compression may be delayed until mid-2025.
“We believe that significant policy measures to reduce sovereign borrowing costs will be the main factor in the compression from a high of 27% as of November 2024. Additionally, the government’s hints at reducing reliance on money market funding, along with potential longer-dated securities issuances, suggest that any new initiatives are likely to occur by mid-2025, further supporting a potential decline in yields at that time”, it stated in a report.
It continued that the Treasury’s demand for money market funding to see ample decline on improving funds from other sources.
“In 2025, we foresee a notable moderation in the Treasury’s demand for money market funding, driven by improved access to alternative funding sources and a strategic pivot towards long-term securities. We expect the ample decline in demand to offer the treasury some space to trim high T-bill yields”.
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