Hailey Borg
In the latest Malta Government Stock (MGS) issue held in early October 2024, the Government raised €400 million from investors.
However, participation from retail investors was lower than the offers held in February and July 2024, both in terms of number of applications and also with respect to total value applied.
In October 2024, retail investors applied for €90 million, compared to €108 million in February and €102 million in July.
It is also evident that retail investors shifted towards longer dated maturities, reflecting expectations of lower interest rates.
Applications for the 6-year bond (the 2.8% MGS 2030) amounted to just €11.4 million while the 10-year bond (the 3.25% MGS 2034) attracted over €78 million.
This contrasts with last year’s trends where investors had preferred the shorter dated MGS.
Meanwhile, the October MGS offer attracted substantial amounts from institutional investors, clearly signalling that financial institutions hold substantial amounts of liquidity that can be invested.
68% of the total issue (or 88% of the institutional auction) was allotted to resident credit institutions, essentially local banks. This provides them with an opportunity to enjoy recurring cash flows for the medium to long term and very low levels of risk.
The total issuance so far this year has surpassed €1 billion, bringing the total MGS outstanding to €9.16 billion.
Nearly half of the total value in MGS outstanding is up for maturity within the next five years, thus the Government is expected to maintain a high level of MGS issuance to refinance the maturing MGS.
The updated Government finance projections that will be presented as part of the Budget Speech next Monday 28 October should provide an update with respect to any further MGS issuance this year and the expected requirements for the next three years.
“Meet Your Market” is issued for information purposes only and does not constitute personal investment advice or recommendation.
The information is based on data obtained from sources considered to be reliable, but no representations or guarantees are made with regard to the accuracy of the data.
Investing in securities may result in a loss of some or all of the capital invested.
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