Dumicz: BGK plans further bond issues on the euro market abroad, available to a wide range of recipients (INTERVIEW)

Luc Williams

Bank Gospodarstwa Krajowego (BGK) assumes the possibility of further issues of foreign bonds this year, both in public and private placement formats; the natural choice for BGK is the euro market, Michał Dumicz, director of the Department of Financial Institutions and Financing Organizations, told ISBnews.

“We assume the possibility of carrying outnext foreign emissions this year, both in public format What private placement. It is a natural choice for BGK euro market. We built on it yield curvewhich we have significantly extended thanks to the last successful issue (dual tranche) with a maturity of 15 years,” Dumicz said in an interview with ISBnews.

The American market has been conquered. The conquest of Japan is planned

“Thanks to last year emissions in dollarswe also have good reconnaissance American market. Based on our experience, we can indicate that local investors perceive BGK as 'high quality issuer'- high quality issuer. Thanks to this, we can assume a regular presence overseas, i.e. even twice a year,” added the director.

On the other hand JPY market the bank is “very forward-looking” and would like to maintain regular contact with Japanese investorsadded.

“In this case, both come into play Shibo Samurai format (samurai bonds) as well as i euro-yen – depending on the structure of the issue and the composition and preferences of investors,” Dumicz pointed out.

BGK an active player

In the opinion of investors, BGK is beginning to be perceived as a regular issuer of debt international capital markets. Currently – after the bank sold bonds worth EUR 2 billion last week – they expect further activity of the Polish development bank this year, says a banker involved in debt instruments on capital marketsquoted by GlobalCapital.

“BGK issued bonds three times last year (on foreign markets), once in euro and twice in dollars. (The issue with a coupon) 5.375% from May 2023 was a debut in dollars. According to the DCM banker (i.e. from debt markets) , which participated in the transaction, BGK will issue bonds again this year, although it was unable to say when and in what currencies,” we read in the article.

The demand for Polish bonds is growing

“The bank has increased financial needs and demand for Polish treasury bonds or anything related to them is quite strong. (…) They have other funds that they need to issue,” the banker added.

On Thursday, BGK priced two tranches benchmark bonds denominated in euro, with maturity dates of March 13, 2032 and March 13, 2039, issued to the COVID-19 Counteract Fund. The total nominal value of the issue of both tranches of bonds will be EUR 2 billion, with the total demand from investors amounting to over EUR 4.7 billion.

The banker quoted by GlobalCapital said that “the market environment is very favorable” and the demand was really high compared to previous transactions in euro.

“They sold more than they planned. They are becoming a more and more regular issuer and are gaining a really strong group of supporters. All the large investors from emerging markets were there, placing large orders,” said the service's source.

Not only institutional investors

GlobalCapital also points out that BGK also issues bonds under the procedure private placementraising €400 million this year and €843 million in autumn 2023 in four transactions.

“They are being implemented at very attractive levels. (…) When the opportunity arises to broadcast these small clips at attractive levels, they do it – they are pragmatic,” said the banker.

As previously reported by BGK, among the buyers of 8-year and 15-year bonds priced yesterday in two benchmark tranches denominated in euro, investors from Poland, Austria, Germany and Switzerland dominated, while when it comes to the types of investors, Investment funds (55% for 8-year-olds and 61% for 5-year-olds).

Consortium of banks supporting the issue

The broadcast was based on medium-term bond issue program (MTN) established by BGK. The managers of the consortium organizing the issue were the following banks: Bank Pekao, Citigroup, Commerzbank, Santander and Société Générale.

BGK is a Polish development bank that initiates and implements programs for Poland's economic growth, cooperating with all development institutions, such as PFR, KUKE, PAIH, PARP and ARP. By implementing strategic development projects, BGK finances, among others: the largest infrastructure investments, increases Poles' access to housing and stimulates the entrepreneurship of Polish companies in the country and abroad. He is an investor in funds whose assets are managed by the Polish Development Fund. In 2018, it began expansion by opening representative offices abroad.

Renata Oljasz


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