News
Citi Handlowy to Organize Bonds Issue for Poland’s National Road Fund
Bank Gospodarstwa Krajowego (BGK) and Bank Handlowy w Warszawie
S.A. announced they will organize a bonds issue to finance the National Road Fund.
The agreement was signed by Ireneusz Fafara, Management Board President of BGK,
Slawomir S. Sikora, President of the Management Board of Bank Handlowy S.A., and
Witold Stepien, President of the Management Board of Dom Maklerski Banku Handlowego
(Brokerage House).
Bank Gospodarstwa Krajowego will handle the
program documentation for the issue of the bonds, which are designated for the
construction of roads financed by the National Road Fund. All bonds issued under this
program shall be fully guaranteed by the State Treasury. Poland’s Council of Ministers
is expected to confirm the issue in the coming days, and the first issue for the amount
of PLN 600 million is planned for early August.
The distribution of securities
under the first issue will be conducted via the proposal to acquire bonds, targeted to
selected investors. The maturity of the bonds would be up to three years. Interest on
the bonds would be based on the floating interest rate, and the level of margin above
the reference rate would be determined based on the book-building among the potential
investors.
The Financial Plan of the National Road Fund for 2009, amended on May
22, 2009, allows such programs to benefit the National Road Fund. Under this plan, the
total expenses of the fund are set at PLN 16.5 billion, of which PLN 14.3 billion would
be allocated to finance the construction, renovation and maintenance of roads. The
volume of bonds to be issued by BGK for the fund is expected to be PLN 7.85 billion.
Currently, the program value totals PLN 600 million; however, the documentation assumes
the value of the program may be increased in a flexible manner. The parameters of bonds
issued under the stated amount – such as maturity, type of interest, volume of the
series – may be adapted to the National Road Fund status and market
conditions.
This is an umbrella-type program, meaning the bonds can be
distributed both under private placement and via a public offer, in accordance with the
Act.
Bank Handlowy w Warszawie S.A. has a broad range of offerings and extensive
experience providing services to the public sector. Since January 2008, it has provided
financial services for Warsaw municipal authorities, and since June 2009, it has
organized bonds issue programs for Bialystok municipal authorities, totaling PLN 100
million. Additionally, the Bank is one of the organizers of the municipal bonds issue
program for the City of Warsaw, for the total amount of PLN 4 billion. In the past, the
Bank co-organized the issue program of revenue bonds for the Bydgoszcz Municipal Water
and Sewage Company for PLN 600 million. (So far, the bonds have been issued for a total
of PLN 320 million).
The Bank, as a leader in the domestic prepaid payment cards
market, provides more than 40 social assistance centers with prepaid benefit cards.
(Currently there are 80,000 active cards.) The Bank was the first to introduce a unique
deposit offer for courts and prosecutors’ offices.
If the volumes of securities
offered increases, additional dealers and entities could join the program. This would be
agreed, on a case-by-case basis, between the issuer and underwriter.