The Treasury has recently held a consultation exercise with the main market players and stakeholders to discuss and consider their views on the launching of a Malta Government Stock (MGS) Switch Auctions Programme (the “Programme”) – on a voluntary basis – over a three (3) year period for those Government Stocks maturing during 2012 to 2014.
It is widely acknowledged that the aim of this issuance strategy – which is an effective debt management tool – is to contribute further towards lengthening and smoothening the interest and redemption 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.
As a result of the positive feedback received during the consultation period, the Treasury announces that it will be launching the first of such operations under the Programme by auctioning on a bid- price basis 4.30% MGS 2016(IV) (the “destination stock”) in exchange for up to Euro 200,000,000 (nominal) of 5.70% MGS 2012(III) (the “source/retiring stock”).
The switch auction is open to all stockholders of 5.70% MGS 2012(III) and the applications shall be in the form of sealed bids for a minimum and multiples of €500,000 (nominal) each. In the case of applications in the name of ‘nominee and/or clients account’, the sealed bids shall be for minimum amounts exceeding €250,000 (nominal) each.
Applications shall open at 8.30 am on Monday 5th December 2011 and close at 2.00 pm on Tuesday 6th December 2011.
The nominal amounts of 4.30% MGS 2016(IV) (the “destination stock”) created and allocated to successful bidders will be calculated according to the ratio of the dirty prices of the two stocks, rounded up to 3 decimal places, multiplied by the nominal amount of the source/retiring stock bid, subject to any scaling factor. The creation and settlement of the new nominal amounts of 4.30% MGS 2016(IV) will be with effect from Wednesday 7th December 2011.
Further details on the said MGS exchange/switch operation can be found in the prospectus published in the Government Gazette and which can be also downloaded from the Treasury website at www.treasury.gov.mt [1] as from Tuesday 29th November 2011.