PKO Bank Hipoteczny will tomorrow (Wednesday) conclude a roadshow ahead of a potential zloty-denominated covered bond that would be its third domestic benchmark, following a Eu500m short six year deal last month that, according to its CEO, expanded its investor base into new jurisdictions.

The PKO Bank Polski subsidiary announced a mandate last Wednesday for a series of investor meetings ahead of a potential zloty-denominated covered bond issue. PKO Bank Polski has mandated its investment banking arm as sole lead manager and bookrunner within Poland, and Erste Bank as sole lead and bookrunner outside Poland.

The roadshow began on Thursday and will conclude tomorrow. PKO declined to comment on the probable timing of the trade.

The deal, which will be backed by zloty-denominated residential mortgages, is expected to be rated Aa3 by Moody’s.

PKO Bank Hipoteczny sold the first benchmark Polish covered bond to be launched after the country’s updated covered bond law took effect in January 2016, printing a debut PLN500m (Eu118m) five year issue last April. It has since sold one more zloty benchmark, a PLN500m five year issue in June.

PKO is the only Polish issuer to have sold euro-denominated benchmark covered bonds to date, having launched two such trades – the last a Eu500m short six year issue on 23 March.

Commenting shortly after the deal, Rafał Kozłowski, CEO of PKO Bank Hipoteczny, told The CBR that through the second international benchmark the issuer had achieved its aim of diversifying its investor base, with accounts from jurisdictions new to the PKO name participating in the deal.

“The strategic decision of the PKO Group is to diversify its funding sources towards covered bonds,” he added. “With the second euro-denominated covered bond issuance PKO Bank Hipoteczny builds its strategic position as a regular issuer on the European market.

“The position may be confirmed with the next transactions in the near future, in the European market or in the domestic one, subject to market conditions.”

The book for the Eu500m issue closed at Eu800m, with over 70 accounts participating. Asset managers were allocated 44% of the deal, banks and private banks 34%, insurance companies and pension funds 13%, and central banks and official institutions 9%. Accounts in Germany took 51%, Austria 9%, the UK 9%, Central and Eastern Europe 7%, the Benelux 6%, Italy 6%, the Nordics 5%, France 4%, and Switzerland 3%.

Kozłowski said at the time of PKO’s second euro issue that pricing in the euro and Polish zloty covered bond markets were “very comparable”, while acknowledging that the euro market is much deeper.