Interest rates on long term funds could be declining in coming months. Thatís if the almost 17 percent of governmentsí offer to investors who participated in Thursdayís bond issue is anything to go by.
Treasury bills are currently hovering round 23 percent while return on long-dated instruments such as the five year bond is pegged at 26 percent.
Usually the return often gives an indication of governmentís preparedness to borrow from the market.
This also eventually influences the rate commercial banks lend to businesses and individuals.
Head of Brokerage at ECOBANK capital, Mahama Iddrisu tells Joy Business borrowers could expect a decline in lending rates.
But Investment Analyst with SIC Financial Services, Derick Mensah tells Joy Business it is however important for the expectations of borrowers to be managed.
Meanwhile, foreign investors appear to have renewed their confidence in the economy after heavily oversubscribing governmentsí three-year bond.
The government paper auctioned yesterday was oversubscribed by almost 500 percent.
Though government sought to raise 400 million cedis, it received 2.2 billion cedis from investors. Out of this, 1.8 billion Ghana cedis came from foreigners. Government however accepted 402 million Ghana cedis.
Acting Finance Minister Dr. Kwabena Duffour has rejected arguments yesterdayís three year bond was oversubscribed because of the yield it offered to investors.
The bond will have a yield of 16.7 percent down from the 21 percent offered to investors in the three-year bond issued in October 2012. Proceeds from the offer will be used to settle the countryís maturing bonds.
Play the attached audio to listen to the various submissions