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Banks held GHS 50.5bn of government bonds as of September 2022

Banks held the largest holders of government bonds and notes of about GHS 50.5 billion as of the end of September 2021...

Banks held GHS 50.5bn of government bonds as of Se
Banks held GHS 50.5bn of government bonds as of Se

Banks held the largest holders of government bonds and notes of about GHS 50.

5 billion as of the end of September 2021.

nnAccording to the monthly bulletin by the Central Securities Depository, the total bonds and domestic.

notes issued by the government were estimated at GHS 160.

1 billion.

nnFirms and Institutions held 25.

3percent (GHS 40.

5 billion), whilst Others including retail with 13.

9percent (GHS 22.

25 billion), and Foreign Investors holding 10.

8percent (GHS 17.

29 billion).

nnThe Bank of Ghana also held 10percent (GHS 16.

1 billion) of the government bonds and notes, whilst pensions was 5.

6percent (GHS 8.

96 billion) and Rural Banks with 1.

4percent (GHS 2.

24 billion).

nnAdditionally, Insurance Companies held 0.

9percent (GHS 1.

44 billion) and SSNIT 0.

4percent (GHS 640.

4 million).

nnTreasury Bills however represented 16.

4percent of total securities, whilst medium-tenor bonds (2 years to 5 years) was estimated.

at 49.

5percent.

nnLong-tenor bonds (6yrs and above) constituted 34.

2 percent of total securities.

nnA study conducted by Banking Consultants Dr.

Richmond Akwasi Atuahene and K.

B.

Frimpong indicated that the estimated bondholders’ net present value losses could have a negative and.

significant impact on the financial and the real sectors of the economy.

nnGiven that Ghana’s financial system held large amounts of government debt (51.

6percent of the domestic debt stock), the expectation is that a collapse in confidence.

in government of Ghana’s solvency would lead to a large‐scale deposit runs and a credit.

crunch.

nnHowever, the study revealed that, if the debt exchange is fully participated by all domestic.

bondholders, debt service relief from the debt exchange programme together with stronger fiscal consolidation efforts.

will assist the government in bringing debt on a sustainable path by 2028 to 55.

percent debt to GDP.

nnGovernment on December 5, 2022, announced a debt exchange programme for domestic bondholders.

nnAccordingly, the Ministry of Finance announced that eligible domestic bonds and notes of GHS 137.

3 billion will be split into four new amortizing bonds maturing in 2027 (17percent ),.

2029 (17percent ), 2032 (25percent ) and 2037 (41percent ), paying equal step-up coupons of.

0percent in 2023, 5percent in 2024 and 10percent from 2025 onward to.

2037.

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