Stocks up but bonds down

Despite the Maltese stock market hitting an all-time high last week, corporate bonds ended the week lower compared to their close in the previous week.

The MSE Corporate Bonds Total Return Index fell by 0.5% to 1,154.01 points. Out of 74 active corporate bond issues, only 13 advanced, while 35 closed in the red. The worst performer was the 5.35% MM Star Malta Finance plc Secured Bonds 2029–2031, which fell by 3% to €97.01.

The local corporate bond market has expanded significantly in recent years, but recent events have highlighted the presence of toxic assets in the public market, mostly concerning assets based on government-backed projects and public land.

These toxic assets include MIDI’s stock and its bonds, Shoreline Mall plc’s bonds, and also the Mediterranean Maritime Hub Finance, the company behind the Mediterranean Maritime Hub at the ex-Malta Shipbuilding site in Marsa.

These toxic assets may inevitably affect the rest of the market negatively, especially if there are repeated occurrences of toxic bonds risking default. The lack of liquidity, short-selling and derivatives is also contributing to the mispricing of toxic assets, and this indirectly impacts the whole market negatively, given that toxic assets are being mispriced at levels similar to liquid assets.

These are the corporate bonds which had selling pressure in the last week.

Mark Camilleri

Website Editor
Historian and Publisher