Opting for the International Financial Market : an analysis of the international issuance of Malta government stocks

Abstract

Purpose The purpose of this study, the like of which has as yet never been attempted, is twofold. First and foremost to understand and analyse the current strategy pursued by the Public Debt Management Committee in relation to the issuance of Malta Government Stocks. Secondly, to identify the ways and means as to how the government can successfully tap into the Eurobond market and at the same time, how hurdles can successfully be overcome. Design The objectives of this study were achieved through a series of semi-structured interviews with high ranking officials from the governmental sector, parastatal bodies and personnel from bank institutions. Government and parastatal officials constitute the majority of the Public Debt Management Committee. Findings The study ascertains that the current debt strategy pursued by the Public Debt Management Committee is that of consolidating the long term fragmentation of debt with the vision of reducing the large number of outstanding bonds by continually topping up the existing Malta Government Stocks. Furthermore, the study confirms that the government has the prospect of raising funds in the European capital market, but the factual costs and risks have to be thoroughly considered, since they would be the economical make or break factors iii Value It is sincerely hoped that this study will encourage further research in this area by government officials in order that it may serve as a foresight especially related to the problem which will be encountered when the 2012 to 2014 bonds worth €1.4 billion will eventually mature and have to be redeemed. This will automatically trigger the mechanism of issuing a further, even bigger bond issue to help finance the government's borrowing and to effect any change in its debt portfolio.