A minimum of 3 public corporate bond issues per month – a summary of the market in 2023.
In 2023, issuers conducted as many as 37 public corporate bond issues, from which they collected over PLN 1.35 billion ($359 million) in total. Investors’ demand amounted to nearly PLN 2 billion，with an average reduction level of 33 percent. The beginning of 2024 saw the start of 5 new public issues, with three issuers announcing new issue prospectuses and 10 prospectuses still active.
The undisputed “king” of public emissions is Kruk, a debt collection firm, which conducted seven of them – the most – for a total sum of PLN 330 million. In addition, all Kruk’s issues ended in reductions, even the one worth PLN 90 million, although in this case the reduction was symbolic at around 9 percent. The largest public issue in the past year was conducted by the household developer Victoria Dom.
However, Kruk’s bonds brought the largest sum of subscriptions, with investor demand for the PLN 50 million issue reaching over PLN 155 million. Furthermore, the PLN 100 million issue was reached at 3 Kruk’s issues, and additionally at 2 Ghelamco’s and Victoria Dom’s issues. It is worth noting that out of 37 issues, 29 ended in reductions. Thus, the average reduction level standing at 33 percent is not surprising.
Real Estate and Financial Industry Emission Leaders
The bond market in 2023 was dominated by three main sectors – financial (Kruk, Best, Credit Inkaso, PragmaGo), developers (Marvipol, Victoria Dom, Echo Investment), and commercial developers (Ghelamco, Cavatina). Among other sectors, we also had one representative from the industrial sector, PCC Rokita. A constant circle of bond market regulars is also clearly visible, as out of these 37 issues, there were only 12 frequently repeated issuers.
Strong Start to the New Year
Currently, we have 10 active issue prospectuses with a remaining amount of just under PLN 2 billion to be utilized. This includes PLN 500 million to be utilized by Kruk, another PLN 100 million by Victoria Dom, PLN 200 million by Echo Investment, and PLN 175 million by Ronson. It is also worth mentioning the three additional prospectuses (Marvipol, Credit Inkaso, Olivia Fin) amounting to PLN 470 million, which are being prepared or have already been approved by the Polish Financial Supervision Authority (KNF). Each prospectus value exceeds PLN 100 million.
In early January 2024, we also saw another 5 public issues worth over PLN 235 million. The first one, Vindexus Securities Exchange, ended with a bang, with a reduction of over 70 percent. Ghelamco is also conducting a PLN 125 million issue, which is not surprising given the large reductions in previous series by this commercial developer. Similarly, Kruk started an issue of 10 million euros, doubling the offer amount compared to the two previous issues in euros that ended with significant reductions.
All public issues last year had variable rates, based on WIBOR/EURIBOR. High interest rates, as well as expectations for their future level, certainly favor the corporate bond market. Plus, add to this the lack of credit risk materialization, i.e., issuer default, the multitude of issues, very high demand, good operating results, and debt indicators for most issuers, increased investment awareness among the general public, the number of active issue prospectuses, and a strong January. All these make us look at the entire year 2024 on the corporate bond market with great optimism.
Author: Szymon Gil, Securities Broker, Certified International Investment Analyst (CIIA)
