The Treasury said today that in terms of the Budget Measures Implementation Act the issuance target of Government Securities for financial year 2008 has been set not to exceed € 300 million.
It is currently projected that the Malta Government Stock (MGS) issue programme for 2008 shall be applied for the purpose of redeeming two MGS issues (totalling €93,174,936) which are due to mature on June 10 and August 28, financing the borrowing requirement for 2008; and effecting changes in the Central Government debt portfolio as and when required in line with Government’s debt management policies.
"This strategy of effecting portfolio changes in the Central Government debt structure should, in principle, not result in an increase in total outstanding debt as it will essentially involve the issuing of MGS in benchmark maturities for broadly the same amount by which the existing stock of other instruments would be reduced,” the Treasury said.
As regards the 2008 issuance strategy, the Treasury intends to initially continue, whenever possible, with the issue of fungible MGS with a view to continuing to top up the existing larger MGS issues so as to contribute to a further deepening in the liquidity of current benchmark issues.
With a view to maximizing the potential benefits of Malta’s membership of the euro zone, the Treasury is actively reviewing its debt management policy and reassessing various options including: whether to structure the 2008 issuance programme in one or more issues and the possibilities for institutional restructuring of the Malta Government securities market.
"Moreover the Treasury firmly believes that the Central Government debt structure needs to be rationalized through a consolidation process aimed at reducing the number of MGS issues to a fewer number of bigger tranches. Measures which the Treasury is considering in this regard include buy-backs of MGS and/or MGS exchange/switching offers,” the Treasury said.
Such rationalization of outstanding government debt is of paramount importance in order to enable the domestic capital market to integrate in a smoother manner into the pan-European markets.”
The Treasury is not planning to issue any MGSs during the first quarter of 2008.
Towards the end of the first quarter, the Treasury will however be in a better position to publish further information about planned issue volumes and the maturity structure of any such issues.
On Treasury Bills, the Treasury said auctions will continue to be held on a weekly basis with a combination of tenors. The focus will be on the 91-day tenor, which constitutes the money market benchmark, although issues will also include a mix of the 28-day, 273-day and 364-day Treasury bills. A calendar showing the tenor of the individual weekly issues will be published in the Government Gazette in advance on a monthly basis.