Treasury lists k1.69tn bonds on stock market

The Malawi Government has listed 30 bonds valued at K1.69 trillion to raise money and also refinance its domestic debt, a development Malawi Stock Exchange (MSE) says will increase access to the 16-counter market.

The listing of the bonds, debt instruments in which an investor loans money to an entity and is issued to raise financing­, will enhance liquidity through generation of interest that the bonds have attracted from the public, according to MSE chief executive officer John Kamanga.

The listed bonds on Monday include five development bonds at K10 billion and 25 Treasury Notes valued at K1.59 trillion and come on the back of lukewarm response from investors on the previously listed securities.

But in a statement on Monday, Kamanga said the listing of the bonds does not only provide a product range for the investors, but also sends a signal that the capital market is deep enough to raise funds for investment and refinance debt.

He said the listing also fosters financial inclusion considering that the minimum amount to invest in the listed debt securities through the MSE is K1 000.

“We commend the government through the Reserve Bank of Malawi [RBM] for their continued efforts and support in deepening the country’s financial market and encourage the investing public to engage their respective agents, stockbrokers and bankers, as these are eligible for secondary debt market trading on the MSE.

“The listing should give a signal to potential debt issuers such as city councils, State-owned enterprises and the private sector on the ability of the domestic capital market to mobilise resources for various projects.”  

Market and investment analyst Bond Mtembezeka described the development as a positive move, saying it adds more products to the pool of trading instruments on the market.

He said: “To the investing public, it means it now has more options to invest in government securities as there are now more listed government securities.

“The purpose of listing is  that investors are given a chance to dispose of their positions on the secondary market whenever they want to, but these medium to long-term securities are usually held by pension funds who hold them to maturity.”

RBM Governor Wilson Banda is on record as having said securities create opportunities for investors to buy and sell and liquidity for those that want to participate in the market.

“The MSE is providing that platform for liquidity through the secondary market,” he said.

The listing of the 30 bonds has increased the number of listed government debt securities to 84, creating diversified trading products on the market.

Lately, Treasury has resorted to long-term borrowing, shifting away from short-term borrowing, which analysts say is a positive move towards domestic debt restructuring.

Nonetheless, there has been little or no trading on the government securities as investors hold on to their securities to maturity.

MSE has engaged services of commercial banks and fund managers to reach out to many people and participate in the secondary trading.