Treasury’s development bond raises K8bn

Ministry of Finance raised K8.63 billion from the K20 billion seven-year development bond, results from the auction held last week show.

The bond was part of the K1 trillion development bond to help finance public infrastructure development projects in the country and has, so far, attracted a 22.47 percent yield.

Results of the auction published on the Reserve Bank of Malawi (RBM) website show that 11 investors applied for the bond and all emerged successful, meaning that government will receive K8.63 billion.

Market and investment analyst Cosmas Chigwe observed that at 22.47 percent, the bond has attracted a better yield and good return for investors.

“Given the current environment where the market is not that liquid, the response is good. Suffice to say the increasing government borrowing is still something we need to look out for as it crowds out private borrowers,” he said.

Malawi Stock Exchange (MSE) operations manager Kelline Kanyangala said in an interview earlier that it is encouraging to see the positive response from investors on the infrastructure bond.

She said: “This is reflective of the appetite that is available for long-term securities in our market.

“As Malawi Stock Exchange, we would like to encourage the private sector to take a similar route to utilise the domestic funds to grow their businesses and the economy.”

The targeted K1 trillion that government intends to raise from the domestic market represents 13 percent of the value of the national economy as measured by gross domestic product (GDP).

Last year, government also raised K13.5 billion from a K20 billion 10-year bond which was also issued as part of the K1 trillion development bond.

Treasury, through the infrastructure development bond, intends to finance 15 development projects.

The projects comprise a judicial complex opposite Parliament Building in Lilongwe, Balaka Market-Nkhotakota-Nkhata Bay Road, Kamuzu Institute for Sports, Dzaleka-Ntchisi-Mpalo-Malomo Road and Ntcheu-Tsangano-Neno-Mwanza Road.

The funds will further finance Rumphi-Nyika-Nthalire-Chitipa road, Inkosi M’mbelwa University, government offices at Capital Hill, a multipurpose dam for Mponela Town and Jenda-Edingeni-Engalaweni-Manyamula-Mzimba Road. The projects, according to the Treasury, are projected to cost about K1.351 trillion and will take different intervals of between four to 54 months to complete, depending on the complexity of the project.