The Treasury announced yesterday that in terms of the 2008 Budget Measures Implementation Act (Act XXXII of 2007), which came into effect on January 1, 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 during 2008, namely, June 10, €23,293,734 7.20 per cent, MGS 2008; and August 28, €69,881,202 7.20 per cent, MGS 2008 (II).
It will also be used to finance the borrowing requirement for 2008 and to effect changes in the central government debt portfolio as and when required in line with the government's debt management policies.
The government said 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. 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 maximising 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; opportunities for broadening the institutional and geographical investor base; and possibilities for institutional restructuring of the government securities market.
A government statement said the Treasury firmly believes that the central government debt structure needs to be rationalised 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.
Such rationalisation 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 government said.
Given the circumstances, 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.
Regarding Treasury bills, 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.