Malawi to issue domestic bonds

BLANTYRE – Malawi aims to launch a domestic bond market at the start of the new financial year on July 1, as part of efforts to ease steep repayment costs on government treasury bills, the Treasury said yesterday.

Malawi is one of the world’s poorest countries and debt service costs account for an estimated 20 per cent of its budget – a burden which it hopes will ease if it wins debt relief from the International Monetary Fund later this year. Finance Minister Goodall Gondwe said in a statement that a formal bond market could be up and running in Malawi by July to ease the short-term costs of domestic debt, pegged at US$444 million (60 billion Malawi kwacha).Malawi’s total debt is estimated at US$2,9 billion.”We are going to secure our debts by holding long term registered stock and this would stabilise the outstanding debt stock,” Gondwe said in the statement.He told Reuters that initially Malawi would aim to issue bonds with a duration of between three and five years, but would extend maturities in the future as local interest rates fell.There were no further details.In the last few years, Malawi has been raising money on the local market, but on a short-term basis, using Treasury bills of between 91 days and 273 days in maturity.Average yields on 91-day bills amounted to 19,71 per cent at the last auction on March 31, official figures show.Malawi’s annual interest rates have declined over the past few years, amounting to 25 per cent in June 2005 compared with 32 per cent in 2004.-Nampa-ReutersFinance Minister Goodall Gondwe said in a statement that a formal bond market could be up and running in Malawi by July to ease the short-term costs of domestic debt, pegged at US$444 million (60 billion Malawi kwacha).Malawi’s total debt is estimated at US$2,9 billion.”We are going to secure our debts by holding long term registered stock and this would stabilise the outstanding debt stock,” Gondwe said in the statement.He told Reuters that initially Malawi would aim to issue bonds with a duration of between three and five years, but would extend maturities in the future as local interest rates fell.There were no further details.In the last few years, Malawi has been raising money on the local market, but on a short-term basis, using Treasury bills of between 91 days and 273 days in maturity.Average yields on 91-day bills amounted to 19,71 per cent at the last auction on March 31, official figures show.Malawi’s annual interest rates have declined over the past few years, amounting to 25 per cent in June 2005 compared with 32 per cent in 2004.-Nampa-Reuters