Govt flags a Treasury note

 Government on Tuesday issued a three-year Treasury note at a coupon rate of 11 percent to help it raise money to refinance its debt.

The auction for the note, which after the primary auction may be traded on the Malawi Stock Exchange (MSE), will be conducted on a multiple price bid basis, whereby each successful bidder pays the price quoted for the amount tendered.

Reserve Bank of Malawi (RBM) spokesperson Mbane Ngwira said the Treasury note, which will be prescribed by government, does not have fixed amount and will be issued only for debt restructuring purposes.

He said: “The note is recurring, as such, it may be issued month by month or sometimes not, depending on the core objective of the bond, which is to raise funds to refinance government debt.

“The note is there to alert the investing public that they would either be on monthly basis or as stated otherwise by government.”

The note issuance comes amid growing public debt accrued by government with latest figures showing Malawi’s debt stock jumped to K3.7 trillion or 65 percent of GDP during the 2018/19 financial year from K3.1 trillion recorded at the end of the previous year.

In his 2019/20 National Budget Statement, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said government was putting in place policies that will help bring down public debt in the medium to long-term.

MSE operations manager Kelline Kanyangala said the Treasury note increases government securities on the local shares market, encouraging investors to participate in the diversified products on offer.

She encouraged the private sector to follow suit and take advantage of the debt platform available on the stock exchange.

Currently there are 13 debt securities listed on the stock exchange, of which eight are government notes.

A Treasury note is a marketable government debt security with a fixed interest rate and maturity between one and 10 years.