On 9 January the Treasury of Malta announced that the amount of issuance of Malta Government Stocks during 2014 will not exceed €650 million. The funds raised will be used to finance the government’s borrowing requirements during the year as well as to finance five MGS redemptions amounting to €361.26 million. The Treasury explained that similar to previous years it will be issuing two different types of securities – the conventional fixed rates MGS and also Floating rate MGSs linked to the 6-month Euribor.
The Treasury is aiming to spread its issuance programme over 4 to 5 issues with a higher concentration during the first half of the year. In fact, the first issue is expected to take place in February 2014 whilst the second is scheduled for the second quarter of 2014.
The maturity structure of the 2014 MGS issue programme will be a mix of (i) 3 to 9-year stocks and (ii) stocks with maturities over 10 years. The full details of the stocks on offer and the respective amounts and maturities will be published 1 to 2 weeks prior to each offer.
In the announcement, the Treasury also made reference to the 3-year MGS Switch Auctions Programme launched in late 2011 and successfully concluded in December 2013. In this respect, the Treasury intends to consult with the main market players and stakeholders to assess whether to relaunch another programme. The intention of such switch programmes are aimed at lengthening and smoothening the interest and redemption profile of the Government’s existing debt portfolio and also to provide an opportunity for institutional investors to diversify the maturity of their investments.
The Treasury also explained that all MGS issued as from 1 January 2013 will include a clause referred to as the Model Collective Action Clauses (CACs) in line with the modifications endorsed by all 17 euro area member states on 2 February 2012 in relation to the establishment of the European Stability Mechanism (ESM). By virtue of these new clauses, only a simple majority is needed to re-contract sovereign debt (issued on or after 1 January 2013 and with a maturity of more than 1 year) thereby facilitating agreement between the sovereign and its private-sector creditors.
In the press release, the Treasury also explained that it will continue to hold auctions for treasury bills on a weekly basis.