In a financial environment where clarity is paramount for investor confidence, the recent description of a company’s staggering debt level as “healthy” has sent ripples of concern through the Maltese corporate bond market. This development comes against the backdrop of a market that saw a record issuance of over €700 million in corporate bonds in 2025, a trend that shows strong signs of continuing. With heightened media and investor attention already focused on several issuers whose bonds are set to mature in 2026, the incident highlights a pressing need for greater accuracy and responsibility in official financial disclosures. As market activity intensifies, the ability of financial analysts and the investing public to critically assess credit metrics has become more crucial than ever, placing a spotlight on the language used to frame corporate risk and financial stability.
The Litmus Test for Corporate Leverage
A cornerstone of credit analysis is the net debt-to-EBITDA ratio, a fundamental metric that offers a clear snapshot of a company’s leverage and its ability to manage its obligations. This ratio measures a company’s total debt burden against its annual earnings before interest, taxes, depreciation, and amortization, effectively calculating the number of years it would theoretically take to repay all its borrowings if earnings remained constant. The interpretation is straightforward: a low multiple indicates a manageable debt level and robust financial health, suggesting the company can comfortably service its debts. Conversely, a high ratio serves as a significant red flag, warning investors of an excessive debt burden and potential instability. To establish a tangible benchmark, an analysis from September 2025 noted that a large number of companies listed on the Malta Stock Exchange (MSE) maintain a multiple below 5 times, a level widely considered very reassuring for the investing public and a key indicator of sustainable leverage.
Recent financial disclosures from several companies that issued new bonds toward the end of 2025 have reinforced this benchmark of prudent financial management. These firms demonstrated strong credit metrics that align with investor expectations for stability and low risk. For instance, MedservRegis plc is projected to see its net debt-to-EBITDA ratio decline to just under 2 times in 2026, showcasing a very healthy and sustainable debt structure. Similarly, the guarantor for SD Finance plc anticipates an adjusted ratio of 2.3 times, another figure that signals strong repayment capacity. Hili Ventures also stands out for its consistently strong performance, with a projected ratio of 4 times for 2026, comfortably within the reassuring sub-5 times threshold. These examples serve as a practical illustration of what constitutes a healthy level of leverage within the local market, providing a clear contrast to more concerning financial profiles and offering investors a reliable yardstick for comparison.
A Case Study in Questionable Disclosures
In stark contrast to these examples of financial prudence, a recent Financial Analysis Summary (FAS) for Central Business Centres plc (CBC) has drawn significant criticism from market analysts. It was noted with considerable disappointment that in this official document, the company’s net debt-to-EBITDA ratio of 19.4 times was defined as “healthy.” Analysts have vehemently disagreed with this characterization, labeling the figure as truly exorbitant and arguing that such an extreme multiple is not open to subjective interpretation. A ratio of this magnitude implies that, at its current earnings level, it would take the company more than 19 years to repay its borrowings. This precarious situation exposes CBC to an exceptionally high degree of refinancing risk, meaning it may face significant challenges in securing new loans or issuing new bonds to repay its existing debt when it matures, placing bondholders in a vulnerable position.
A deeper examination of the company’s financial data reveals the basis for these concerns. Central Business Centres plc was expected to close 2025 with a net debt exceeding €44 million against an EBITDA of just €3.4 million. The FAS further projects that the company’s net debt will peak at over €45.7 million in 2026 following another planned bond issue of €16.5 million. While the company forecasts an improvement in its financial performance, with EBITDA anticipated to rise to €5.1 million by 2027, this would only bring the net debt-to-EBITDA ratio down to 8.5 times. Even this “improved” figure remains substantially higher than the sub-5 times benchmark that is considered reassuring. The overarching point made by critics is that a 19 times multiple is considered alarmingly elevated by any objective standard, whether applied by international credit rating agencies or local financial risk assessment models, making its description as “healthy” deeply problematic.
A Call for Greater Market Integrity
The controversy surrounding this disclosure broadened the conversation from a single company’s financial health to the integrity of the wider market ecosystem and the role of regulatory oversight. The introduction of the Financial Analysis Summary by the Malta Financial Services Authority (MFSA) was widely praised as a truly great initiative that provided investors with invaluable access to company forecasts and standardized ratios, enabling better-informed decisions. However, this praise was tempered by surprise that the MFSA, which is responsible for reviewing these documents before publication, allowed a net debt-to-EBITDA ratio of 19.4 times to be officially described as “healthy.” The incident raised serious questions about the rigor of the review process and tied into the broader discussion about investor education, a prominent topic throughout 2025. It underscored the argument that while educating investors remained a top priority, it was equally imperative that financial intermediaries and market participants adhered to a standard of using precise and responsible terminology. Documents like the FAS were intended as educational tools, and their purpose was undermined when they contained misleading language, ultimately calling for a conscious drive to ensure that disclosures were an accurate and objective reflection of a company’s true financial risk.
