Market
Debt Securities
Overview
Debt securities are financial instruments issued by governments or corporations to raise funds. These securities represent a loan made by the investor to the issuer, and in return, the issuer agrees to pay back the principal (face value) with interest, typically over a fixed period.
Debt securities are generally seen as lower risk compared to equities, especially when issued by governments. Below are the types of debt securities issued in Ghana:
Treasury Bills (T-Bills)
Description
Short-term government securities with a maturity of less than one year, usually 91 days or 182 days. They are issued at a discount from their face value.
Interest
Investors earn income through the difference between the purchase price and the face value of the T-Bill.
Purpose
Primarily issued to raise short-term funds to support government operations or monetary policy. Bank of Ghana and Cocobod also issue treasury bills to support cocoa purchases and other financial needs.
Treasury Bonds
Description
Short-term government securities with a maturity of less than one year, usually 91 days or 182 days. They are issued at a discount from their face value.
Interest
Investors earn income through the difference between the purchase price and the face value of the T-Bill.
Purpose
Primarily issued to raise short-term funds to support government operations or monetary policy. Bank of Ghana and Cocobod also issue treasury bills to support cocoa purchases and other financial needs.
Treasury Notes
Description
Medium-term debt instruments issued by the Government of Ghana with a maturity between one and two years
Interest
Investors earn interest through semi-annual coupon payments at a fixed rate.
Purpose
On the redemption date, investors receive the final coupon payment along with the principal value (nominal value) of the security.
Treasury Bonds
Description
Long-term government debt securities with maturities exceeding two years. These bonds are typically issued for periods of 7 years or longer.
Interest
Bonds make fixed or sometimes variable interest payments (coupons) to investors, usually on a semi-annual basis.
Purpose
Issued by the Government of Ghana to finance large-scale projects or to meet fiscal needs.
Corporate Bonds
Description
Debt securities issued by corporations to raise capital for business activities such as expansions, acquisitions, or capital expenditures.
Coupon Rates
These can either be fixed or floating, depending on the issuer’s structure and the investor’s preference.
Maturity
On the redemption date, investors receive the final coupon payment along with the principal value (nominal value) of the security.
