The Reserve Bank of Malawi (RBM), an agent of the Malawi Government, has said all benchmark issuances will be listed on the Malawi Stock Exchange (MSE).
This was revealed on Monday when the government listed a K5 billion two-year Treasury Note on the market.
RBM Manager for Market Developments, Franklyn Khoza, said the government last year published an issuance calendar for domestic debt, which gives a schedule of when Treasury Bills and Benchmark Treasury Notes will be issued, up to June 2018.
He said this is part of the initiative to issue debt securities at frequent and predictable intervals.
Khoza said this will be normal practice going forward; whereby the calendar will be published at the beginning of the fiscal year to allow the investing public an opportunity to plan their asset allocation strategies.
“The two-year Treasury Note that will be listed this morning [Monday] is the first of the benchmark securities in the government’s Treasury Note programme as outlined in the issuance calendar. The other maturities are three, five, seven and 10 years.
“Later this week, we will apply to the MSE to list the three-year note that was successfully issued last week, with a face value of K3 billion,” he said.
Khoza said the listed notes will benefit from the advantages of trading on a regulated secondary market, and provide alternative investment avenues to investors.
He said the visibility created by the exchange potentially increases liquidity of the instruments and will, in the end, improve price discovery.
“By having the benchmark treasury notes listed, it is expected that the brokers or dealers on the exchange will market the securities just as they
do for other listed securities. Likewise, it is expected that fund managers and the investing public will actively trade these securities and help develop the secondary market for government securities.
“An active secondary market will build a benchmark yield curve which will provide the basis for pricing non-government bonds and enable private companies to issue debt instruments to raise capital directly from the public. We hope this will start happening in the very near future,” Khoza said.
MSE Chief Executive Officer, John Kamanga, said the Treasury Note listing will help in the provision of diversity and liquidity.
He also said the listing would enhance the development of the stock exchange.
“I urge all Malawians to utilise the opportunities on the stock exchange and enjoy the benefits it offers,” Kamanga said.