The month of November has been a truly busy time for the domestic bond market with various corporate bonds being issued together with the final Malta Government Stock (MGS) offering by the Treasury in which €426 million was raised. This is €24m below the total permitted issuance of €45m, indicating the aggressive auctions placed by institutional investors. Following this latest issue, the overall amount of MGS raised this year totals €1.26bn, a slight increase over the MGS issuance in 2024.
While there are still a number of bonds whose offer period is ongoing, it is positive to note that the three MGSs on offer last week attracted a demand of €103m from retail investors (applications up to a maximum of €499,900). While this represents a decline from the amounts subscribed in both February and July of this year (averaging €150m during each issue), it is very much in line with the allocation during the three offerings in 2024. Moreover, the amount raised from retail applicants of €103m must be analysed within the context of the unprecedented issuance in recent weeks across the corporate bond market totalling just over €350 million, as well as the very short offer period typical of MGSs of less than a week.
The information published by the Treasury so far has not provided any indication on which was the most popular MGS within the retail investor category, i.e. whether the five-year, the 10-year or the 15-year offering. Incidentally, both the 10-year MGS and the 15-year MGS on offer last week, namely the 3.4% MGS 2035 and the 3.8% MGS 2040, were identical (and indeed fungible) with those issued in July 2025 and also at the same price of 100% (par) for each security. In July 2025, within the €155m allotted to retail investors, the 10-year bond was only marginally more popular than the 15-year issue, so it would be interesting to gauge whether this was also the case in last week’s offering.
The statistical analysis published by the Treasury last Friday revealed some interesting data on the investor classification and pricing details of the competitive auctions for amounts in excess of €500,000.
In total, the bids submitted for the three MGSs amounted to €439.5m with the Treasury accepting €323m split as follows: €106m in the five-year MGS, €130.5m in the 10-year MGS and €86.5m in the 15-year MGS.
Local credit institutions were allotted a total of €102m with the five-year MGS being the most sought-after at €67m and the balance of €35m in the 10-year offering. Incidentally, there were no bids lodged by local credit institutions for the 15-year MGS.
In last week’s auction, there was strong demand by international credit institutions (banks) with allocations totalling €166 million. In stark contrast to the pattern for local banks, the most popular instrument by the foreign banks was the 15-year bond, with a total allocation of €82m followed by €66m in the 10-year offering and only €18m in the five-year MGS.
“Participation by international investors is not a new phenomenon”
The participation by international investors is not a new phenomenon in the MGS market. Data published annually by the Central Bank of Malta reveals a steady increase in MGS held by non-residents. In fact, as at end of 2024, the amount of MGS
held by international investors amounted to just over €1.6bn or 18% of the total MGS in issue of €9.1bn. In total during 2025, European credit institutions subscribed for €295m in MGS or 23% of the total MGS issued. The additional allotment of €166m in last week’s auction is a remarkable increase following the €77m in July 2025 and €51.5m in February 2025. This could potentially be evident of a new trend given Malta’s credit rating, strong economic performance and relatively low debt to GDP ratio compared to the EU average.
Another important aspect within the information published by the Treasury last Friday was the pricing of the various bonds within the competitive auction and mainly the reason for the total issuance of €426m falling short of the maximum amount of €450m.
The Treasury indicated that in the €106m allotted to institutional investors in the five-year MGS (the 2.55% MGS 2030), the price range was wide with the highest bid at 100.05% and a cut-off price of 98.23% (YTM: 3.00%). The weighted average price for accepted bids was of 99.00%, which translates into a YTM of 2.80%. Within the €106m, a total of €67m were allotted to local credit institutions with €18m to European banks. Meanwhile, bids totalling €51.5m were not accepted as the prices were below the level of 98.23%.
A higher amount of €130.5m was allotted in the 10-year bond (the 3.40% MGS 2035) at prices ranging from a high of 100.05% to a cut-off price of 97.19% (YTM: 3.75%). The weighted average price for accepted bids was of 98.1217%, which translates into a YTM of 3.63%. In this MGS, the allotment to European banks at €66 million exceeded that of local banks at €35m. Other bids amounting to €50m were not accepted as the prices were below the level of 97.19%.
Finally, within the 15-year bond, (the 3.80% MGS 2040), a total of €86.5m were allotted to institutional investors at prices ranging from a high of 98.50% (compared to the offer price to retail investors of 100%) to a cut-off price of 96.83% (YTM: 4.086%). The weighted average price for accepted bids was of 97.24%, which translates into a YTM of 4.048%. The large majority of the successful auctions were by European banks amounting to €82m. Other bids totalling €15m were not accepted as the prices were below the level of 96.83%.
The different categories of investors applying for the recent MGS issue and the auction prices are important observations for the investing public. The increased participation by foreign banks is notable (totalling €295m this year) and the auction prices at well-below the fixed price of retail investors is also significant.
With the expected MGS issuance in 2026 of €1.9bn (with around €1bn required for refinancing existing MGS’s maturing next year), it is important to gauge participation by retail investors and local institutional investors to understand whether the Treasury will become increasingly reliant on international participation given the high MGS exposure already prevalent among local banks.
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