The Malawi Stock Exchange (MSE) registered the first trade on the debt market last Thursday through a corporate bond issued by MyBucks Banking Corporation in 2019 at a nominal value of K10 million.
The trade has broken the trading drought for listed debt instruments meant to raise capital and refinance the bank’s debt.
A daily MSE market update shows that 10 000 notes of the MyBucks Banking Corporation debt security with a nominal value of K10 million were traded at a value of K10.02 million.
In an interview on Friday, MSE operations manager Kelline Kanyangala said the issue of illiquidity on the bond market is not unique to Malawi as other exchanges in the region experience the same, but added that the development could be a beginning for better things to come.
She said: “One of the challenges we have observed is investors hold on to their securities and thus do not usually trade.
“However, we hope that this is a step in the right direction because as the stock exchange, we want to ensure investors actively trade in both equity and debt instruments.”
Stockbrokers Malawi Limited chief executive officer Noel Kadzakumanja in an interview on Friday said the development shows that the local shares market is capable of facilitating trade of any security.
“If we did not see this bond trading for a long time, it is simply because those who purchased this bond were mostly finding the bond to be too good to offload,” he said.
The MSE debt platform was introduced in 2010, considering the possibility that some entities may not be willing to bring in shareholders in their companies.
A latest MSE report shows that there are five corporate notes by MyBucks Banking Corporation and 23 government Treasury notes with a total nominal value of K916.5 billion.
Lately, Treasury has resorted to long-term borrowing shifting away from short-term borrowing, which analysts say is a positive move towards debt restructuring.
Latest on the table is 10-year Treasury note at a coupon rate of 15 percent issued in December 2020.