Bond market to remain quiet in 2023; market turnover dipped 46% last week

Activity in the domestic bond market is expected to remain slow in 2023 due to the debt exchange programme.

The bond market endured quiet sessions in the later part of 2023, mostly with limited trades as investors continue to decide on the Domestic Debt Exchange (DDX) programme.

Total market turnover dipped by 46% weak-on-week to ¢468.41 million last week. But that was primarily also due to a much shorter trading week because of the Christmas festivity.

The Ministry of Finance extended the participation deadline for the domestic debt exchange programme to January 16, 2023.

With this extension, individual bondholders were invited to participate in the programme.

Due to this, analysts expect a slowdown of trading activity on the secondary bond market in the coming weeks until the DDX is completed.

Government is yet to issue its calendar for borrowing in the first quarter of 2023, but experts are estimating a refinancing trade of about¢23.06 billion across treasury bills.

The 91-day bill is expected to account for 76% of the upcoming maturities.

Whilst the 91-day and 182-day T-bills will be issued weekly, the 364-day will be floated bi-weekly.

The 2 to 7-year bonds will be subject to prevailing market conditions.

Again, the issuance of Inflation-Linked Bonds will be subject to market conditions.