Local companies owe Maltese investors over €2.6 billion

There is over €2.6 billion in outstanding debt owed to the local general public by companies on the Main List of the Malta Stock Exchange (MSE), with over a third of this amount being raised in just the last three years.

A total of 37 companies issued 42 bonds with a total value of €1.08 billion between 2021 and 2023.

This is more than four times the amount borrowed from the market by local companies between 1994 and 2004, according to records kept by the MSE. One reason for the increasing popularity of market-based finance may be the ever increasing red tape surrounding bank lending, especially after the Great Financial Crisis of the late 2000s.

International Hotel Investments (the company behind the Corinthia brand of hotels) stands out as the largest borrower over the last three years, with two bond issues of €60 million (2021) and €80 million (2023).

LifeStar Insurance is the smallest, with a bond issue of €2.4 million.

These figures do not include companies choosing to list their bonds on the Prospects Market of the MSE, which is typically used by smaller companies. These have raised an additional €76 million, and include household names like The Convenience Shop and Busy Bee.

The last three years have also seen a rapid rise in interest rates as central banks around the world try to bring inflation under control. As the European Central Bank’s key rates have increased, so have those offered by firms.

While 2021 saw coupon rates on bond issues between 3.5 and 4.75 per cent, in 2023 the lowest rate was five per cent, barring one outlier: Malta’s first-ever green bond offered by ClearFlowPlus, the financing vehicle of the state-owned Water Services Corporation.

These rates remain a far cry from those seen during the early days of the MSE in the 1990s and early 2000s, when coupon rates above six per cent were the norm.