Merkanti Holding Misses Bond Interest Payment as Liquidity Squeeze Worsens
Merkanti Holding missed its bond interest payment, scrambling for bridge financing. The delay highlights deepening liquidity strains and raises MFSA oversight questions.
Merkanti Holding plc has missed its 5.7% secured bond interest payment due on 12 August, leaving bondholders in limbo while the company races to secure bridge financing against proceeds from an asset sale.
The Malta-listed group informed the market of the delay in a classified inside information notice, stating it was “working on a solution” and expected to pay within the bond’s 60-day grace period. The announcement comes months after The Shift first reported that Merkanti’s banking subsidiary was winding down.
The bond itself was already restructured in 2024, when bondholders approved an extension from the original 2026 maturity to 2033 and an interest rate hike from 4% to 5.7%. The move spared Merkanti from repaying the €25 million principal this year but substantially increased its annual interest bill. Bondholders had little choice but to accept.
Financial pressure has been building beneath the surface. Interest cover stood at just 1.2 times the bond’s interest in 2025 and is forecast to slip to 1.1 times this year. Merkanti Holding depends heavily on income and dividends from group companies, while substantial liquidity has been advanced to related parties.
Its banking arm recorded a €3.6 million loss in 2025 as operations wound down. The group’s German property subsidiary swung from €1.4 million positive EBITDA in 2024 to a negative €610,000 last year.
The missed payment also puts the Malta Financial Services Authority under scrutiny. The regulator had not commented on the evolving situation by the time of reporting, despite questions sent by The Shift. Investors were left without formal market communication when the bank closure was decided last year, raising concerns about the timeliness of disclosures.
Merkanti Bank obtained its Malta licence in 2016, previously owned by Austria’s BAWAG. It focused on niche corporate services including factoring, inventory finance and trade finance. That operation is now being wound down, leaving the holding company to service a bond that is increasingly at risk.