The Treasury this morning announced its programme for the issue of government securities, saying government borrowing will not exceed €650 million.
The issuance of Malta Government Stock this year will be used to redeem seven MGS issues totalling €370,267,923 which are due to mature as follows:
24th February 2013 - € 7,250,000 FRN MGS 2013(V) linked to 6 month Euribor
18th May 2013 - €52,000,000 FRN MGS 2013(VII) linked to 6 month Euribor
19th May 2013 - €60,565,893 6.35% MGS 2013 (II)
11th August 2013 - €30,000,000 FRN MGS 2013(VI) linked to 6 month Euribor
18th October 2013 - €140,514,800 3.60% MGS 2013 (IV)
18th October 2013 - € 79,781,860 7.80% MGS 2013
31st December 2013 - €155,370 7.00% MGS 2013 (III)
The borrowing will also be used to finance the government borrowing requirements for 2013 ( including a provisionally estimated Central Government Deficit of €95m), and for changes in the Central Government debt portfolio as and when required in line with the Government’s debt management policies.
Types of MGS issuance
The issuance programme will be covered by the issue of the conventional fixed rate MGS, and the Floating Rate MGS (FR Bond) linked to the six month Euribor.
The conventional fixed rate Malta Government Stock is expected to be the Treasury’s primary financial instrument by which to fund the central government borrowing requirements during 2013.
Alongside the conventional MGS, the Treasury will extend the issuance programme of the Floating Rate MGS linked to the six-month Euribor via the auction system for institutional investors.
Frequency
The Treasury intends to fund the financing requirements for 2013 over four to five issues with a more front-loaded programme across the first half of the year. The first MGS offer is planned to be issued in late February, purposely to meet part of the above-mentioned 2013 MGSs redemption programme totalling €370,267,923. The second offer is expected in mid-April 2013.
The Treasury, as part of its issuance strategy, will adopt a degree of flexibility to adapt quickly to changing market and other conditions and, where necessary, review and re-arrange the amount that will be allocated for each issue as well as the intervals of issuances.
Maturity
The maturity structure of the 2013 MGS issues will be a mix of the 3 – 9 year and over 10 - year maturity areas.
The exact maturity and details on whether the offer will be for a new stock or a re-opening of an existing MGS will be announced 1 to 2 weeks prior to each offer.
Terms and conditions will be published in the Government Gazette prior to the actual date of each issue.
MGS Switch auctions
In November 2011 the Treasury launched a Malta Government Stock Switch Auctions Programme – on a voluntary basis - to be conducted over a three year period as part of its issuance strategy for lengthening and smoothening the interest and redemption profile of the existing MGSs debt portfolio and also, to some extent, to provide an opportunity for institutional investors to diversify the maturity of their bond portfolios.
Prior to the implementation of the third stage of the MGS Switch Auctions Programme in 2013, the Treasury will hold consultations with the main market players and stakeholders.
Treasury Bills
Auctions will continue to be held on a weekly basis, normally on Tuesday of the auction week.
The maturity structure of issues will include a mix of 28-day, 91-day, 182 day, 273-day and 364-day Treasury bills.
The issuance is expected to focus on the 28 –day and 91-day tenor.
A calendar showing the tenor of the individual weekly issues planned for each month will be published in the Government Gazette in advance on a monthly basis.
The Treasury Bills Prospectus may be viewed on Treasury’s website at www.treasury.gov.mt under News and Press Releases section.