On 28 November, the Treasury of Malta launched a Malta Government Stock (MGS) Switch Auctions Programme following a consultation exercise with the main market players and stakeholders. The Programme, which will be on a voluntary basis, will be spread over three years and will only relate to those MGS’s maturing between 2012 and 2014. This Voluntary Switch Programme is aimed at lengthening and smoothening the interest payments and redemptions of the existing MGS’s. To a lesser extent, this Programme is also intended to give institutional investors the opportunity to diversify the maturity of their bond portfolios.
In the announcement, the Treasury also revealed the first operation of this Programme. The first switch auction is open to all holders of the 5.7% MGS 2012 (III), referred to as the source stock, as at close of trading on Tuesday 29 November. The holders of the source stock can opt to bid for the new stock on offer, namely the 4.3% MGS 2016 (IV), referred to as the destination stock. The Treasury is willing to exchange up to €200 million (nominal).
Applications in the form of sealed bids may be submitted from Monday 5 December to Tuesday 6 December at 1400 hours. Applications must be for a minimum of €500,000 and in multiples of €500,000 thereafter. However, applications under ‘nominee and / or clients a/c’ shall be for a minimum of €250,000.
In view of this switch auction, the Malta Stock Exchange this morning announced that trading in the 5.7% MGS 2012 (III) will be temporarily suspended as from Wednesday 30 November 2011 until further notice.