OTP Mortgage Bank will tomorrow (Tuesday) embark on a first series of investor meetings in more than two years in a bid to bring investors up to speed on changes that have taken place in Hungary and within the OTP group, including a new plan designed to combat foreign-exchange risk, an official at the bank told The Covered Bond Report.

The issuer has hired BNP Paribas, Citi and Morgan Stanley to help arrange investor meetings that will take place in Austria, Germany, the Netherlands and the UK, with possible additional visits in other countries.

“We would like to test investors’ attitudes and if the feedback is positive we may follow up on the meetings with a deal,” said György Máriás, head of treasury at OTP Mortgage Bank. “The last time we had meetings with investors was more than two years ago and many economic, political and legal circumstances have changed in Hungary, so we need to educate investors about them.

“We are not against doing a deal, but one of our main aims is to get our name into investors’ minds,” he added.

Máriás said that besides introducing to investors recent developments at OTP Mortgage Bank, the bank also wants to explain three changes that have taken place in Hungary and within the OTP group: the introduction of a home protection plan designed to help homeowners who are unable to pay off their mortgages; the steps Hungary’s government has been taking to address the country’s economic problems; and an amendment to the guarantee structure within the OTP group.

“All three aspects work in favour of bondholders,” said Máriás.

The government’s home protection plan is designed to address the large volume of foreign-denominated debt in Hungary, which represents around 70% of the country’s total consumer debt, according to a commentary from the International Law Office. It allows debtors who are fewer than 90 days behind on payments to join a fixed exchange rate scheme whereby exchange rates for mortgage repayments will be fixed at Huf180 per Swiss franc, Huf250 per euro, and Huf200 to 100 yen until the end of 2014. The programme also replaces a blanket prohibition on foreclosures with quotas determining the number of homes banks may be able to sell on the market, and creates a new institution of state asset manager to purchase the homes of non-paying debtors, who may rent them.

OTP group’s guarantee structure has been amended so that OTP Bank provides an irrevocable payment undertaking related to the outstanding mortgage bonds of OTP Mortgage Bank instead of guaranteeing to repurchase non-performing mortgage loans from the mortgage bank, as was previously the case.