A number of firms are gearing themselves up to issue bonds for listing on the Malta Stock exchange after summer, industry sources confirmed with this newspaper.
Melita plc, Corinthia Group of Companies and Mizzi Organisation are among the list of undertakings considering bonds against bank financing.
“The general investor in Malta has shown to be more interested in earning a coupon, while the banks may be showing a tighter fist in lending to the local entrepreneur,” a market analyst, who preferred not to be mentioned by name, told Business Today.
Corinthia may even be considering the issue of equities also for part financing of the Palm City Project in Libya.
“A number of bonds are nearing their maturity period and firms are seriously considering a reissue to enjoy a stable interest coupon rate,” he said.
Meanwhile, Island Hotels are expected to approach the market with their first bond issue in order to finance an expansion and part finance existing lending. Lately, the corporate setup of the same firm saw a restructuring process.
Spokespersons for Melita and Corinthia Group refused to comment on their plans in the regard, while we were unable to reach either Mizzi Organisation spokesperson or Island Hotels Director Winston J. Zahra by telephone yesterday.
Also in September, government is expected to approach the market for further financing while The European Investment Bank (EIB) shall issue a bond to seek Maltese investors’ funds and local listing. Industry Sources have calculated that in total, these bonds, with the exception of the one issued by government last week, are expected to garner around €350 million.
The government, as always, is the prime mover with a call of €100 million, closely followed by EIB at €50 million. The private firms are expected to seek a €20 million minimum but it is also expected that a bolder Corinthia will come out with a dual call for bonds and equities for higher values and through different entities forming the group.
“As the interest rates for depositors are at record lows, investors are expected to take up all the offers,” the analyst commented. “The two major banks, together with leading stock brokers, will act as book runners, but unlike the past, no issue is expected to be fully underwritten by banks. The siphoning off of extra funds into savings may not bode well to the local economy unless the funds gathered are not immediately placed into new projects in Malta.
“With the Malta’s membership in the EU, local firms have now understood that their bonds are attractive to a wider community even though this has not yet shown to have been a positive intake of foreign direct investment.”
Government is expected to consider this string of issues for funds by the private sector as a positive sign and the underlining of a stronger economy.
“All in all, it is a case where people are now turning their funds into bonds, after seeing that property has not continued to return the quick buck that it used to,” he added. “Moreover, a number of local Fund Managers that have been active in issuing new calls with special purpose funds are now experiencing diminishing returns to their investors and are no longer creating such calls.”
This is an added bonus to the private entities that have come out with Bonds not just in Euro, but also with calls gathering sterling and US Dollars.
“Observers have lauded government’s move to allow investors to repatriate their overseas savings prior to Euro adoption. This now legalised money, having incurred the two year parked bound period, can strategically be the knee-jerk needed for the local economy, seeing that the tourism sector this year will not provide the growth projected this time last year.”
