Bloomberg’s John Ainger explained what’s happening in the Greek bond market quite well in his article ‘Greek Bonds Emerge From the Fire of 2011 Stronger Than Ever‘. What comes to mind is Ghana’s high yielding bond market.
Comparing Greece to the peers, you will see the looming danger as Greek bonds have returned over 20% this year. To those willing to take the risk of holding the junk-rated and illiquid debt, it might be seen as the best in the euro area. In the Ghanaian market, secondary bond yields are hovering around 19% with coupons around 19.75% -20%. The question then is, are we approaching danger zones like Greece?
At the height of the euro-area financial crisis, yields sky-rocketed amid fears that the Mediterranean nation would become bankrupt and tumble out of the EU.
I hope Ghana learns from Greece and take caution. Unlike Greece, we don’t have an EU to support us in times of difficulties. Since IMF’s programme ended, Government has issued over GHS12 billion bond and expected to issue another Ghs11 billion for the third quarter of 2019. With this increasing demand, investor-appetite is stimulated and the problem gets bigger as we approach election year.
“Risk comes from not knowing what you’re doing”