PKO Bank Hipoteczny’s covered bonds debut on the International market

• PKO Bank Hipoteczny will issue covered bonds worth EUR 500 million with 5 years and 8 months maturity and a fixed yield of 0.178 percent
• In the process of bookbuilding, over 90 investors made orders for PKO Bank Hipoteczny’s covered bonds totaling to ca EUR 1.5 billion
• Covered bonds will be issued on October 24, 2016.

PKO Bank Hipoteczny offered to institutional investors covered bonds with a total value of EUR 500 million and a fixed yield of 0.178 percent, which was established during the bookbuilding process conducted on October 17. The maturity was set at 5 years and 8 months.

Jakub Papierski, Deputy CEO of PKO Bank Polski and the Chairman of the Supervisory Board of PKO Bank Hipoteczny, said: Consistently, we are diversifying funding sources of the PKO Bank Polski Group and we are extending their maturities. This time,following this year's alignment of Polish covered bond law with the best European benchmarks, PKO Bank Hipoteczny entered the international market with euro-denominated covered bonds. This is the first ever international benchmark size issuance of covered bonds from Poland. We are proud to be the ones setting new standards in the Polish mortgage banking market, and that our offer was met with great interest by foreign investors. This transaction is a proof of trust in PKO Bank Polski Group and in the amended Act on Covered Bonds. It is finally a confirmation of the strengths of the Polish economy and its long-term stability. It is reflected well in its price that is just 3 bps over Polish sovereign debt costs.

A total number of more than 90 investors made orders for PKO Bank Hipoteczny’s covered bonds, totaling to ca EUR 1.5 billion. This means that the book was 3 times oversubscribed. Among the institutions that will acquire the covered bonds there are investors from 18 countries. 

Proceeds from this issuance will enable the Group to introduce the fixed rate residential mortgage loans.

Rafał Kozłowski, CEO of PKO Bank Hipoteczny, said: Thanks to this issuance, PKO Bank Polski Group will get funding at a fixed interest rate for a period of nearly 6 years. It is an important element to start offering residential mortgages with extended period of fixed interest rate. Such mortgages mitigate clients’ risk of growing credit installments triggered by the increase in interest rates. This is a dominant model of residential mortgages in many European countries.

At the end of September 2016, Moody's Investors Service has assigned a provisional (P)Aa3 long-term rating to the Euro-denominated covered bond programme. The rating assigned to covered bonds of PKO Bank Hipoteczny is in line with the Aa3 rating of the outstanding Polish-Zloty-denominated covered bonds of PKO Bank Hipoteczny and is the highest possible rating for Polish securities, which is capped by Poland’s country ceiling of Aa3.

On 28 September 2016 the Commission de Surveillance du Secteur Financier in Luxembourg approved the Base Prospectus for PKO Bank Hipoteczny’s European EUR 4 billion covered bond programme. The programme stipulates that the covered bonds may be admitted to trading on both the Luxembourg and Warsaw stock exchanges.