14 - 20 September 2000

Treasury long bond drops in traded value

by a staff reporter

The Treasury long bond, the 2019 6.6 per cent, fell to a capital value of 98.53 yielding 6.3 per cent from 104.80 yielding 6.3 per cent last Thursday. The drop in capital value happened after the announcement of two new bond issues, the 2009 5.9 per cent (third issue) and the 2014 6.6 per cent (first issue).

Prior to these new issues, the most recent bond offer took place last may where one of the issues maturing in 2015 had a coupon of 6.1 per cent attached to it. One financial practitioner told The Malta Business Weekly:

"This bond will yield 6.6 per cent at a price of 92.4 ignoring purchasing fees and wiping out more than one year's interest. It would be good to know the reason behind the decision to issue new bonds only four months later with more attractive yields when interest rates have been coming down."