Euro adoption - Euro conversion of stocks and shares
How will the euro changeover conversion affect local bonds (both corporate and sovereign) and treasury bills?All Malta Government Stocks and corporate bonds denominated in Maltese lira will be converted into euro immediately on January 1, 2008. The...
How will the euro changeover conversion affect local bonds (both corporate and sovereign) and treasury bills?
All Malta Government Stocks and corporate bonds denominated in Maltese lira will be converted into euro immediately on January 1, 2008. The redenominations of fixed interest securities will be effected using a "bottom-up" method.
This approach begins by looking at the individual holdings of each investor (per security/per MSE account number) and dividing the nominal by the irrevocable fixed rate of 0.429300. All converted nominal amounts will then be rounded up to the nearest whole euro.
The following table indicates, as an example, the equivalent "new" nominal holdings in euro once the conversion takes place:
This method ensures that investors will not suffer any loss due to the redenomination exercise. Simultaneously, the overall nominal value of a bond (issue amount) will increase with the addition of every single holding per investor.
Most fixed interest securities listed on the Malta Stock Exchange trade in minimum lots of 100 nominal, however, changes will be in place to ensure that even the residual odd lots (amounts less than 100 nominal) can be sold or purchased.
The bottom-up method ensures that, all things remaining equal, fixed interest securities and treasury bills maturing after January 1, 2008 will be redeemed at par. This also means that the bond's trading prices in Maltese lira on the last trading session of the current year will translate at the same level into euro on the first day of trading after the adoption of the single currency.
All bond holders should be notified of their new holdings by the central securities depository of the Malta Stock Exchange.
Mr Cassar Torreggiani is the executive head responsible for the euro changeover programme at Bank of Valletta.
All Malta Government Stocks and corporate bonds denominated in Maltese lira will be converted into euro immediately on January 1, 2008. The redenominations of fixed interest securities will be effected using a "bottom-up" method.
This approach begins by looking at the individual holdings of each investor (per security/per MSE account number) and dividing the nominal by the irrevocable fixed rate of 0.429300. All converted nominal amounts will then be rounded up to the nearest whole euro.
The following table indicates, as an example, the equivalent "new" nominal holdings in euro once the conversion takes place:
Lm nominal |
Euro unrounded |
"New" euro nominal |
100 |
232.937339 |
233 |
11,000 |
25,623.107394 |
25,624 |
50,300 |
117,167.481947 |
117,168 |
This method ensures that investors will not suffer any loss due to the redenomination exercise. Simultaneously, the overall nominal value of a bond (issue amount) will increase with the addition of every single holding per investor.
Most fixed interest securities listed on the Malta Stock Exchange trade in minimum lots of 100 nominal, however, changes will be in place to ensure that even the residual odd lots (amounts less than 100 nominal) can be sold or purchased.
The bottom-up method ensures that, all things remaining equal, fixed interest securities and treasury bills maturing after January 1, 2008 will be redeemed at par. This also means that the bond's trading prices in Maltese lira on the last trading session of the current year will translate at the same level into euro on the first day of trading after the adoption of the single currency.
All bond holders should be notified of their new holdings by the central securities depository of the Malta Stock Exchange.
Mr Cassar Torreggiani is the executive head responsible for the euro changeover programme at Bank of Valletta.