mBank Hipoteczny (mBH) is a mortgage bank with the longest track record of issuing covered bonds on the Polish capital market. As of December 31, 2019, the value of issued mortgage covered bonds amounted to PLN 8.2 billion.
Covered bond issues conducted by mBank Hipoteczny constitute an important part of mBank Group’s funding strategy.
In 2019, mBank Hipoteczny placed two issues of mortgage covered bonds in the total nominal amount of PLN 1.4 billion. A summary of mBH activity on the public market in 2019 is presented in the following table.
||Tenor (in years)
||Place of quotation
||9 years 10 months
||WIBOR 3M + 80 p.b.
||WSE Secondary Market and Bondspot
||5 years 10 months
(MS + 43 p.b.)
|Luxembourg Stock Exchange
PLN 100 million issue was performed under the Domestic Covered Bonds Issuance Programme accepted by the PFSA in 2016. Book building was run by mBank, 8 investors declared their will do purchase covered bonds, including asset management firms, banks, insurers and pension funds. It is currently the covered bonds issuance quoted at the WSE with the longest maturity.
EUR 300 million issue was another benchmark covered bonds issuance on the international market performed under the International Covered Bonds Issue Programme. The final pricing reached 43 basis points over MS (Mid-Swap) and coupon was set at 0.242%. From the mBank Group’s perspective, it is the most favourably placed debt issuance on the international market in the history.
In total 74 investors declared their will do purchase covered bonds for a joined value of over EUR 1 billion (3.4 times the placed amount). After the allocation, the structure of the transaction by the geographical and institutional distribution was the following:
Covered bonds issued by mBank Hipoteczny are characterised by low investment risk, which is a result of the statutory obligation to apply complex security mechanisms while issuing and trading in such instruments.
On May 27, 2019, Moody’s Investors Service assigned a rating Aa3 to the covered bonds issued by mBank Hipoteczny. It is the highest possible to achieve rating for the financial instruments issued in Poland (local and foreign currency bond ceilings for Poland). It is higher by 2 notches than the rating of Poland and by 5 notches than the long-term issuer rating, assigned by the agency at Baa2. On November 12, 2019, the rating of EUR covered bonds was affirmed at Aa3.
Moody’s Investors Service assigned also the short-term issuer rating for mBank Hipoteczny at Prime-2. At the same time, the agency assigned the Counterparty Risk Assessment (long-term and short-term) at the level of A3 (cr) and Prime-2 (cr), respectively, and Counterparty Risk Rating (long-term and short-term) at the level of A3 (cr) and Prime-2 (cr), respectively. The outlook of long-term ratings is stable.