PKO Bank Hipoteczny, the mortgage unit of Poland’s largest bank, sold PLN 500 million ($126 million) of covered bonds to institutional investors at a rate of 3-month WIBOR plus 59 basis points. The interest rate on the bonds, which have a maturity of five years and one day, was set in a book-building process.
“We are pleased that our second benchmark issue of covered bonds has met with great interest among investors,” said PKO Bank Hipoteczny President Rafał Kozłowski. “The results of the subscription process confirm that the market appreciates the care we take in ensuring a high-quality cover pool for the bonds. Investors were also pleased with the way our parent bank’s brokerage conducted the book-building process, which was in line with best practice on European markets, particularly in the area of effective communication with investors.”
Twenty-three investors subscribed for a total of 681.5 million złoty of the bonds, a 36% oversubscription rate. Domestic investors purchased almost 75% of the issue, with the rest going to foreign institutions such as the European Bank for Reconstruction and Development.
The bank plans to list the bonds on the parallel market of the Warsaw Stock Exchange, as well as the off-exchange market Bondspot. PKO Bank Hipoteczny expects the first day of trading on 29 June 2016.
The third series of covered bonds is part of PKO Bank Hipoteczny’s Covered Bonds Issuance Program targeting the domestic market, on the basis of the Base Prospectus approved by Poland’s Financial Supervision Authority (KNF) on 12 November 2015.
In December 2015, Moody’s rated PKO Bank Hipoteczny’s Covered Bonds Issuance Program Aa3 – the highest possible rating for Polish securities. This was reflected in the ratings agency’s report dated 7 June 2016. Covered bonds are a type of debt paper secured by payments on mortgage loans, and constitute one of the world’s safest financial instruments. PKO Bank Hipoteczny’s covered bonds are secured solely by złoty-denominated housing loans.
The bank carried out its first benchmark sale of the bonds in April 2016, targeting institutional investors with an issue of 500 million złoty priced at 3-month WIBOR plus 65 basis points, with a maturity of five years plus one day.
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PKO Bank Hipoteczny is 100% owned by PKO Bank Polski, Poland’s largest bank, and specialises in złoty-denominated housing loans. PKO Bank Hipoteczny’s main purpose is to secure long-term financing by issuing covered bonds. In August 2014, PKO Bank Polski received approval from Poland’s Financial Supervision Authority to set up a mortgage bank, which began operating in April 2015.
This material is for promotional purposes only. The only legally binding documents concerning the issue of Series 3 mortgage covered bonds (the Covered Bonds) by PKO Bank Hipoteczny SA (the Issuer) are the Base Prospectus approved by the Financial Supervision Authority on 12 November 2015, together with the annexes to the prospectus, the updates and the final issuance conditions for the Covered Bonds, published on the Issuer’s website (www.pkobh.pl) and the website of Dom Maklerski PKO Banku Polskiego (www.dm.pkobp.pl).