Corporations are aiming for a record. In 2025, they will issue approximately PLN 2.2 billion in debt securities.

The total volume of corporate debt securities issued to individual investors based on prospectuses will reach almost PLN 2.2 billion in 2025, which is PLN 185 million higher than the total volume of issues from the best 12 months of 2017-18 so far, estimated Emil Szweda from Obligacje.pl.

As the expert pointed out, the size of the mortgage bond issue planned for October is unprecedented in the market for corporate securities offered to individual investors. PKO BH's offering reaches PLN 1.2 billion, six times larger than the largest issue ever conducted (by Orlen).

"The record value of a single issue translates into a record for the entire market; the total scale of corporate debt securities issued to individual investors based on issue prospectuses will reach almost PLN 2.2 billion this year, which is PLN 185 million higher than the sum of issues from the best 12 months so far, falling in 2017-18 (Orlen placed five issues worth a total of PLN 1 billion then)," wrote the expert.

"The unprecedented value of the offering (as a reminder, the entire prospectus allows for the placement of PLN 10 billion) also means that the offering will be addressed to a wider group of investors than before. On average, 500-2,200 subscriptions are submitted within a single issue, with an average value of PLN 115,000 (data based on 2025 from internal materials at bondacje.pl). Even the maximum mobilization of "traditional" buyers of corporate bonds would only allow for the absorption of one-third of PKO BH's offering," he added.

According to the expert, the offeror is targeting a different group of investors - those who have so far purchased state treasury savings bonds and opened bank deposits .

"In their eyes, the ability to diversify their portfolio is a valuable benefit, and the terms offered are on par with those of treasury bonds. Short-term bonds actually fare better than comparable one- and two-year securities, because these, like the short-term bonds offered, bear interest based on the NBP reference rate," Emil Szweda wrote in a commentary.

As indicated, PKO BH will pay a slightly higher margin (0.25 percentage points above the reference rate) for a slightly longer tenor (three-year maturity). It will also offer an exit option at a minimal cost, in the form of a brokerage commission, as the bonds will be listed on Catalyst.

Szweda assessed that the liquidity of new instruments on Catalyst is a key issue here.

"If it proves to be suitable, it will be possible to speak of a new category, a new class of debt instruments in investor portfolios, not just individual ones. Floating-rate mortgage bonds will not be exposed to interest rate risk, so their valuations should not be subject to sudden fluctuations, and they are also minimally exposed to credit risk. After all, the ratings of covered bonds are several notches higher than treasury bonds, and for good reason – these are double-collateral instruments, and moreover, PKO BH clearly overcollateralizes them compared to statutory requirements," he wrote.

"With adequate liquidity, holders of free cash will be able to buy and sell LZ as needed to allocate and release cash, and the only limitation - apart from the issue of supply and demand - will be the profitability of concluding transactions (brokerage commissions in both directions are the equivalent of approximately one month's interest)," he added.

As reported, the market maker, in the form of PKO BP, assured that spreads will be tight and if necessary, it will buy "any amount" of LZ.

"This guarantee is important not only for individual investors, but also for corporate finance directors who can use the liquidity reserves as instruments for investing surplus liquidity," the expert said.

"The PKO BH issue and the prospects for expanding the LZ market may prove to be a real game changer in the area of ​​corporate liquidity management, provided, however, that the profitability does not prove attractive to investment funds, which could simply buy all the securities and lock them in their portfolios until the maturity date," he added.

(PAP Business)

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