Financial news

Trading activity at the Malta Stock Exchange was halted prior to the commencement of yesterday's session as the power cut across Malta prevented a number of brokers from remotely linking up with the exchange.

As a result no deals were struck in the regular market, although the Treasury-Bill market attracted five trades in four of the discounted securities.

On Monday, Bank of Valletta announced the allotment policy which applies to applications received in respect of its 5.35 per cent subordinated bonds 2019 which opened to the public on June 8. All applications below €4,000 nominal were accepted in full, while those above €4,000 received this amount as a minimum and circa 0.54 per cent thereafter. The bank also announced that the interest payable on the bond will commence as from Monday.

Last Friday, International Hotel Investments announced that, following obtaining the necessary approval from the Listing Authority, it would be issuing €30 million 6.25 per cent Bonds maturing between 2015-2019, subject to an over-allotment option of an additional €5 million.

The announcement followed that by Tumas Investments which will also be issuing 6.25 per cent bonds maturing between 2014-2016 for an aggregate principal amount of €20 million with an over-allotment option not exceeding €5 million. The bonds will be guaranteed by Spinola Development Company Ltd with the proceeds being used to re-finance its existing borrowings and general financial needs.

Applications for the above issues are already available from financial intermediaries acting as selling agents.

In addition to these corporate issues, the government is offering for sale a total of €100 million in any one or a combination of fungible tranches of the 3.60 per cent Malta Government Stock 2013 and 5.20 per cent Malta Government Stock 2020.

The Accountant General reserves the right to exercise an over-allotment option for an additional amount of €20 million. The prices and corresponding yields to maturity will be determined tomorrow afternoon.

Weekly US economic review

In the United States the week's positive data focused on US retail sales and consumer confidence which rose for a forth consecutive month. However, the week also featured negative economic indicators, particularly in the housing market as the US Federal Reserve gave an insight into the financial health of US households.

The "flow of funds" report released by the Federal Reserve showed that household balance sheets deteriorated for the fifth consecutive quarter in the first three months of 2009 by $1.3 trillion, making for a cumulative wealth destruction of $12.2 trillion, which occurred as a result of falling house and equity prices. Furthermore, US homebuilder sentiment also declined in June as higher mortgage rates and an ongoing credit crunch damped expectations for the sector. Meanwhile, on a positive note, the University of Michigan preliminary index of consumer sentiment, which includes household perception of their financial situation increased in June to a reading of 69.0 from a previous reading of 68.7 in May. Elsewhere in the state of New York, the factory sector shrank more than expected in June than in the previous month. In fact, the New York Fed's Empire State general business conditions index fell to - 9.41 this month from a reading of -4.55 in May.

US retail sales rose by 0.5 per cent month on month in May for the first time in three months as consumers benefitted from bargains following the Chrysler and GM bankruptcies. However, economists expect that in real terms consumer growth for the second quarter is still likely to be negative.

This article has been prepared by Bank of Valletta p.l.c. (the Bank), which is licensed to conduct investment services business by the MFSA, for your general information only. This information is not a solicitation or offer by the Bank to acquire or sell securities. Nor does it constitute any form of advice by the Bank. Appropriate advice should be obtained before making any such decision. Past performance is not necessarily a guide to future performance and the value of your investments may fall or rise.