PKN’s seven-year bonds listed on secondary market

The debt securities are traded on the debt instrument market operated by the Warsaw Stock Exchange. The issue, carried out on February 27th 2012, was exceptional in many respects: in terms of its size, at the time the issue equalled the largest ever issue of corporate bonds to be launched on the Polish market, and the seven-year maturity was the longest maturity among all issues addressed to non-banking investors. Already in February, the Company declared to take steps to have the bonds listed on a stock-exchange market. From the investors’ perspective, the listing on the Catalyst bond platform ensures liquidity of their investments and security of transaction settlements guaranteed by the Polish National Depository for Securities.

“Especially now, at the time when financial markets suffer from a lack of confidence, bonds issued by listed companies with an established market position, stable financial situation and well reputed among investors, are a good alternative to bank loans. Bonds issued by us in February this year attracted enormous interest: the demand was nearly three times the size of the offering. By having the bonds listed on the Catalyst market, we have provided an opportunity to purchase PKN ORLEN debt securities to a wider group of prospective investors. We have also increased investors’ comfort levels, because as of today they have continuous control over their invested capital,” emphasized Mr Sławomir Jędrzejczyk, Vice-President of the ORLEN Management Board. “Even in times of crisis it is possible to build trust between financial investors and businesses. Three years ago, we negotiated loan agreements with banks to avoid breaching financial covenants. Today, we are a trustworthy issuer,” added Mr Jędrzejczyk.

With this transaction, PKN ORLEN is setting new transparency standards on the Polish debt securities market. It is not an SPV that acts as the issuer, but the Company itself. Further, PKN ORLEN resolved to disclose the issue price and terms well in advance. The transaction was executed on very attractive price terms: banking and legal costs were reduced to the minimum, while the terms of the bonds do not impose any financial covenants on PKN ORLEN. By issuing long-term securities, the Company managed to extend the maturity profile of its financing. Most of the instruments will fall due in 2016-2019.

In its efforts to raise financing outside the banking sector, PKN ORLEN follows the global trend towards securing sources of financing alternative to bank credit facilities. As regulations prepared by the Basel Committee on Banking Supervision (Basel III) limit the possibility of obtaining bank loans, raising financing through other means, such as a bond issue, will become attractive. This trend has been observed for more than a decade now on the US and European markets. The CEE region, where corporate bonds are not very popular, will have to embrace these standards.

The first listing of PKN ORLEN bonds was accompanied by a discussion attended by Professor Leszek Pawłowicz, Vice-President of the Gdańsk Institute of Market Economics, Ludwik Sobolewski, President of the WSE Management Board, Sławomir Jędrzejczak, CFO and Vice-President of the PKN ORLEN Management Board, Małgorzata Kołakowska, President of the ING Bank Śląski Management Board, and Andrzej Kopyrski, Vice-President of the Pekao S.A. Management Board. The debate was devoted to the theme of building issuer credibility and alternative forms of financing at the time of crisis.