Government coupon rate drops to 10 percent

By Kingsley Jassi: The latest Treasury notes auction, held on June 22, 2026, saw the government's low borrowing appetite driving the coupon rate to 10 percent. The Reserve Bank of Malawi (RBM) sees this trend working well to ease the cost of government borrowing due to fiscal pressure amid huge public debt. According to RBM spokesperson Boston Maliketi Banda, market conditions— including liquidity conditions within the banking sector and investor demand for government securities—continued to influence the pricing of Treasury bills. "These dynamics have contributed to a gradual easing of yields in recent auctions," he said. The financial market has thrived in recent times and wallowed in huge profits, thanks to the government's borrowing appetite that did not only drive interest rates high but also aided the growth of money supply. Bankers Association of Malawi President Phillip Madinga said the compression in yields would moderate interest income from the government lending portfolio. "However, banks anticipated this normalisation. The sector has been diversifying revenue through SME [small and medium enterprise] lending, digital transactions, bancassurance and fee-based services," Madinga said. Private sector lending, according to Madinga, is generally improving and growing on the back of some of the recent developments. He said strong capital buffers built over the past two years also positioned banks to absorb the impact while maintaining stability. Economist Velli Nyirongo said banks and institutional investors that previously relied on high-yield government securities for stable returns may experience compressed margins. He said this could push them to rebalance portfolios towards private sector lending. However, economist Marvin Banda said lower government borrowing alone did not automatically translate into increased private sector credit. "Banks will only lend if there are viable bankable projects, predictable macroeconomic conditions and reasonable confidence that borrowers can repay because credit follows confidence," he said.

WIRE — By Kingsley Jassi: The latest Treasury notes auction, held on June 22, 2026, saw the government's low borrowing appetite driving the coupon rate to 10 percent. The Reserve Bank of Malawi (RBM) sees this trend working well to ease the cost of government borrowing due to fiscal pressure amid huge public debt. According to RBM spokesperson Boston Maliketi Banda, market conditions— including liquidity conditions within the banking sector and investor demand for government securities—continued to influence the pricing of Treasury bills. "These dynamics have contributed to a gradual easing of yields in recent auctions," he said. The financial market has thrived in recent times and wallowed in huge profits, thanks to the government's borrowing appetite that did not only drive interest rates high but also aided the growth of money supply. Bankers Association of Malawi President Phillip Madinga said the compression in yields would moderate interest income from the government lending portfolio. "However, banks anticipated this normalisation. The sector has been diversifying revenue through SME [small and medium enterprise] lending, digital transactions, bancassurance and fee-based services," Madinga said. Private sector lending, according to Madinga, is generally improving and growing on the back of some of the recent developments. He said strong capital buffers built over the past two years also positioned banks to absorb the impact while maintaining stability. Economist Velli Nyirongo said banks and institutional investors that previously relied on high-yield government securities for stable returns may experience compressed margins. He said this could push them to rebalance portfolios towards private sector lending. However, economist Marvin Banda said lower government borrowing alone did not automatically translate into increased private sector credit. "Banks will only lend if there are viable bankable projects, predictable macroeconomic conditions and reasonable confidence that borrowers can repay because credit follows confidence," he said.

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