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K787bn govt bonds listed

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By William Kumwembe

The government yesterday listed on the Malawi Stock Exchange (MSE) its K787.13 billion bonds, a move which has been rated highly by market experts.

This entails the government will be borrowing using a debt instrument that can be traded.

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Through the bond, the government is able to solicit funds for development initiatives as well as debt settlement.

It is also poised to boost activity on the local bourse as a platform for secondary trading of financial products, according to market experts.

The minimum amount to participate in the secondary market for listed debt securities is K1,000 compared to K1 million on the primary market.

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Speaking after the listing yesterday, RBM Governor Wilson Banda said the move would help push liquidity on the market.

“This is debt which is already in the system. If borrowing is for investment purposes, then it is not bad. The only borrowing that goes into consumption may create issues but this one is for investment purposes,” Banda said.

He rated the move as exciting, saying it creates opportunities for investors at all levels.

MSE Chief Executive Officer John Kamanga said the bonds would offer liquidity on the market through generation of interest it has attracted from the general public.

He then called on local institutions to make the most of the stock market.

“It is therefore my call and plea to commercial State-owned companies not to go external to borrow when they can raise the same amount from our domestic market and be part of the wealth and job creation agenda,” Kamanga said.

Market expert and Bridgepath Capital Limited Chief Executive Officer Emmanuel Chokani rated the listing as ideal and timely.

“It is a good initiative for the market as it is adding to the pool of available instruments on the market.

“At least there are more instruments, which is something that takes us a bit more forward in terms of developing the capital market,” Chokani said.

He said there was still a need for creation of awareness if the market were to embrace the instrument.

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