MGS prices rally on extended Eurozone woes

Malta Government Stock bid prices quoted by the Central Bank of Malta increased sharply this morning in response to the significant decline in Eurozone yields to fresh all-time lows. The benchmark 10-year German bund yields dropped to a low of 1.706% as equity markets tumbled and on increased concern on developments in Greece and Italy. The Greek Government announced plans to introduce a property tax which could raise up to €2 billion per annum in further efforts to convince investors that the country can avoid a default. Meanwhile, during a Treasury Bill auction held by Italy today, yields jumped to 4.153% for 12-month paper compared to a yield of 2.959% during last month’s auction.

The Rizzo Farrugia MGS Index advanced by 0.3% to close at its highest level since 24 November 2010. The price of the 4.25% MGS 2017 (III) climbed to a new all-time high of 105.11% compared to the May 2011 offer price of 100.75%. On the corporate bond market, a first trade was executed in the second tranche of the 4.8% Bank of Valletta plc 2018 notes at a price of 101.50%. Meanwhile, the first tranche also traded today with the price rising to 102%.

On the equity market, further gains in banking equities helped the MSE Share Index advance by a further 0.5% to 3,130.513 points. Most of the trades took place in Bank of Valletta plc. Over 36,000 shares traded today with the price edging 1.2% higher to €2.62.

HSBC Bank Malta plc also added 1.1% to €2.73 but volumes remained very weak. The only other active equity was Malta International Airport plc. Low volumes were also evident in MIA with the price shedding 2% to €1.51 on activity of only 800 shares.

Last Friday evening, Island Hotels Group Holdings plc issued its Interim Statement confirming that during their financial year ending 31 October 2011, the Directors expect the performance to be similar to that in the previous financial year when a loss of €0.65 million was registered.