BoG pledges to deepen bond market

The Bank of Ghana has pledged to deepen its commitment to development of the country’s bond market. Aimed at boosting investor confidence and sustaining investor appetite, this will provide the required long-term financing needs for economic growth, Kwasi Amissah-Arthur, Governor of the Bank of Ghana (BoG), has stated.

“As a market for long-term savings, the bond market in the country can only develop within the context of macroeconomic stability.”

The bond market, which is also known as the debt, credit, or fixed income market, is a financial market wherein participants buy and sell debt securities - usually in the form of bonds.

Among other initiatives the Bank intends to implement to ensure development of the market are included: recognising the primary dealer system, strengthening the trade and settlement infrastructure, harmonising the legal and regulatory framework and responsibilities of market players to support the growth of the market, Mr. Amissah-Arthur told investors, bankers, government officials and other participants at the Access Bank’s 2010 Seminar on the Bond Market in Accra.

Mr. Amissah-Arthur explained that the strategy for developing an active bond market in the country critically depends on continued fiscal consolidation and macroeconomic stability, with private and public enterprises having strong balance sheets and respect for contractual obligations.

He indicated that the Bank will collaborate with the Ministry of Finance and Economic Planning to release an assurance calendar for bonds to help deepen the market and establish incentives to encourage secondary market activities.

“To develop the bond market further, the BoG has facilitated the establishment of market infrastructure for efficient issuance trading and settlement systems of government securities. These include establishment of the Central Securities Depositary, and the Electronic Real Time Gross Settlement System which ensures that traded securities are settled immediately after sale - in line with international best practices.”

Mr. Amissah-Arthur also said the Bond financing strengthens the financial sector and diversifies financing channels in the economy away from traditional bank financing and stock market. Bond markets also provide new channels for investing long-term savings.

“Deep and liquid bond markets provide governments with opportunities to issue long-dated instruments, and to effectively manage debt without disturbing macroeconomic stability,” he stressed; adding that successful bond market development hinges critically on macroeconomic stability fostered by monetary prudence and fiscal sustainability.

The seminar, which is the first of many in a series of such events to be hosted by Access Bank, was aimed at addressing topical issues which entrench global best practices with a view to contributing to development of the country’s economy.

“At Access Bank, we recognise the enormous potentials available in the country’s capital market. We therefore seek to bring our tested expertise, garnered from across the continent, to bear – so as to harness these potentials and position the Ghanaian capital market as a leader in sub-Saharan Africa.

“This conference is a demonstration of our commitment towards actualising this objective,” said Mr. Herbert Wigwe, Group Deputy Managing Director, Access Bank PLC.

Yomi Akapo, Managing Director, Access Bank Ghana, said: “At Access Bank, we strongly believe that an active Bond market will help create alternative sources of financing and, more importantly, free-up capital for businesses through the issuance and trade of corporate bonds.

“We therefore seek to contribute to development of the Bond market by supporting government’s efforts in grooming this market, and also aid in strengthening investor participation for an efficient secondary market.”