470 million euros raised in bonds on primary market

More than €470 million were raised in bonds on the local primary market across 20 issues in 2022, a record for Malta, although bond investors did not all fair well.

In fact, the Malta Corporate Bond Index closed 2022 with a decline of 4.7% while the Malta Government Stock market registered a decline of 19.7%.

But despite several corporate bonds dropping below their par value in the last six months of the year, nearly all bond issues were quickly oversubscribed.

The bond offers in 2022 included new offerings from existing issuers as well new offerings from other companies who approached the market for the first time.

These included IZI Finance, the new operators of the national lotto and land-based betting outlets, Multitude Bank, formerly Ferratum Bank, BNF Bank and G3 Finance.

Another bank, Izola Bank, approached the market for the third time in 12 years.

Bank of Valletta issued a huge €350 million bond issue on the Irish Stock Exchange at a coupon of 10% per annum. For that bond issue, only professional investors could subscribe for a minimum of €100,000.

A financial analyst explained to BusinessToday that bonds for many companies – and even institutions like banks – bonds remain far more stable method of raising capital than borrowing money.

“The core distinguishing feature to keep in mind is that the interest rate on bond issues is fixed,” the source said. “That is not the case when a company borrows money from a bank, where it will face a fixed rate over a variable rate of interest.”

2023 promises to be equally active on the bond market as 2022.

First off the mark will be Qawra Palace, which is issuing a €25 million secured 10-year bond issue with a coupon of 5.25%.

This is the first time Qawra Palace is approaching the market with a bond issue and, according to its prospectus, €16,400,000 will be used for the purpose of repaying outstanding amounts under a BOV loan.

€1,500,000 will be utilised for general corporate funding purposes.

The remaining €6,700,000 will be utilised to partly finance the extension and refurbishment of the Qawra Palace currently underway.

The hotel is expected to reopen its doors on 15 April after undergoing its first comprehensive makeover since it started welcoming its first guests in March 1985.

The €40 million refurbishment will see the hotel increase the number of guest rooms from 394 to 571 as well as offering luxurious spa amenities, which also include an indoor pool, jacuzzi, sauna, and beauty salon.

A rooftop infinity pool and sundeck area, complete with bar, restaurant and poolside entertainment, will complement a number of restaurants and relexation areas.

And in an exciting twist, the hotel will be contracting foreign entities to perform on-site in a specially created auditorium which can seat 1,000 guests and will be equipped with cutting-edge digital technology and the latest sound and lighting effects.