- PKO Bank Hipoteczny’s covered bonds started trading on the Warsaw Stock Exchange’s parallel market on 11 May.
PKO Bank Hipoteczny’s PLN 500 million issue of covered bonds are the first debt securities collateralised exclusively by złoty-denominated residential mortgages granted to individual clients that will be traded on the WSE’s parallel market.
PKO Bank Hipoteczny’s covered bonds made their debut on the Warsaw Stock Exchange on 11 May 2016. The PLN 500 million issue of debt securities will be traded on the parallel market.
PKO Bank Hipoteczny’s covered bonds began trading on the WSE’s parallel market and on the off-exchange market Bondspot. They were issued as part of the lender’s Covered Bonds Issuance Programme, approved by the Financial Supervision Authority on 12 November 2015.
“The Warsaw Stock Exchange is seeking to promote the Catalyst market as a place that gives investors access to a range of debt instruments,” said WSE President Małgorzata Zaleska. “The listing of PKO Bank Hipoteczny’s covered bonds on the WSE is a fantastic example of this kind of diversification. We see the need for more such financial instruments, with a high level of safety, to be traded on the parallel market; from our perspective they are a very important element of Poland’s bond market.”
On 27 April 2016, PKO Bank Hipoteczny held its first benchmark issue of mortgage covered bonds, targeted at institutional investors. The value of the issue reached PLN 500 million, and the bonds bore interest of 3-month WIBOR plus 65 basis points, with a maturity of five years plus one day.
As part of the book-building process, 37 investors including the European Bank for Reconstruction and Development subscribed to buy a total of PLN 1.24 billion of covered bonds, meaning the sale was almost 150% oversubscribed.
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 high level of safety of PKO Bank Hipoteczny’s covered bonds has been confirmed by the rating agency Moody’s, which in December 2015 gave them an Aa3 rating, the highest possible level for Polish securities (the Country Ceiling level).
“PKO Bank Hipoteczny’s covered bonds are some of the safest debt instruments on Poland’s financial markets, as evidenced by their Aa3 rating from Moody’s,” said Rafał Kozłowski, president of PKO Bank Hipoteczny. “We are pleased that the high quality of our covered bonds is also appreciated by investors. We are confident that the great interest in our covered bonds, combined with their listing on the WSE’s parallel market and Bondspot, will help increase the liquidity of the Polish covered-bond market.”
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On 11 December 2015 PKO Bank Hipoteczny held its pilot issue of 5-year covered bonds, with a value of PLN 30 million, paying interest of 3-month WIBOR plus 75 basis points.