Malawi Stock Exchange urges companies to issue bonds

The Malawi Stock Exchange (MSE) has said the country’s corporate entities stand to benefit if they take the bond market as home for investment to raise funds to finance their infrastructural developments.

MSE debt market symposium in Blantyre
MSE debt market symposium in Blantyre
MSE chief executive officer John Kamanga speaking at the symposium

In an interview with Nyasa Times during the day long debt market symposium in Blantyre on Tuesday, the MSE chief executive officer John Kamanga said without necessarily listing on the stock market, the issuance of bonds on the stock market is prudent for corporate entities which are commercial in nature to raise capital.

He said there are currently enough funds available especially pension funds, in the economy which are all looking for homes for investment.

“There is a lot of infrastructure development that is being undertaken by the several commercial institutions. For instance, we face a lot of blackouts but electricity Supply Corporation of Malawi needs funds to expand their generation capacity.

“ If such entities realize the benefits of raising bonds, they would have an upper hand in raising capital at a such entities realize the benefits of raising bonds relatively cheap cost through long term financing which can be taken through long term bond issuance unlike the short term which they have been doing all along,” he said.

Kamanga said government has already set precedence in issuance of bonds expressing optimism that once the bonds list on MSE, they will entice others especially state owned enterprises to do the same.

“We have already seen that the government is geared towards raising capital. It has already listed bonds on the market and is looking forward to listing extra bonds evidenced by the issuance of almost four bonds through the central bank.

“ Right now , it is just a matter of time for those that were fully subscribed to list on the stock market to give a chance to those who did not participate in the primary issuance of bonds to participate in the secondary market when these bonds are listed on MSE,” he added.

According to Kamanga, the performance of companies listed on bond has been so impressive with government entities accumulating about 290 million as profits.

However, Mike Mlombwa, the president for indigenous business association of Malawi expressed concern over the sidelining of local companies to listed on the stock market as compared to foreing entities.

Bonds are investment instruments with low cost and highly efficient, transparent and conveniently investment tools designed to appeal not only to institutional, but also to retail investors.

With an affordable standard lot size, bonds also provide an avenue for retail investors to have access to the bond market, offering investors an additional investment alternative and opportunity to diversify.

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