Ghana Awaiting IMF Aid Sees Bond Yield at Highest Among EM Peers

Investors are demanding a lofty premium to hold Ghana’s local-currency bonds as they await details of how the International Monetary Fund might support an economy buffeted by a plunging currency and rampant inflation.

Yields topping 34% are the highest in the developing-nation asset class, according to Bloomberg indexes that track key markets.

Investors have dumped Ghana’s cedi this year with concern about the impact of a global slowdown on demand for commodities such as cocoa spurring a 38% decline for the currency. That’s feeding an inflationary surge that helped push Ghana to begin talks with the IMF in July over an assistance package of as much as $3 billion.

Yield Surge

Ghana average local-currency bond yield is highest in EM

“Local bond yields remain entrenched above 31% yield for the short end and higher for rest of the curve,” said Joe Delvaux, an emerging-markets distressed debt portfolio manager in London at Amundi.

Currency Slump Spawns Surprise Jump in Ghana’s Inflation Rate

“The key element remains the discussions with the IMF, and hopefully the ensuing funded program,” he said. “At this stage, the broader market will be waiting to see what the outcome of the IMF discussions are, the program details and what the economic assumptions that would underpin it. ”