mBank Hipoteczny is ready to issue its first public euro-denominated covered bonds, potentially including a benchmark, after having received approval for a new Eu3bn programme, but does not plan to enter the market yet, according to a treasury official at the Polish issuer, with holidays and results pending.

mBank Hipoteczny on Thursday announced that the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg approved the base prospectus for its Eu3bn international covered bond programme.

“This is a milestone in the process of diversification of possibilities of issuing covered bonds for mBank Hipoteczny,” Wojciech Zdunkiewicz, ALM senior specialist at mBank Hipoteczny’s treasury department, told The CBR. “It opens up new markets for us and makes us more accessible for European investors.”

mBank Hipoteczny had previously issued covered bonds out of an older domestic programme, including euro-denominated private placements.

Zdunkiewicz said that through the new international programme, mBank Hipoteczny can for the first time offer euro-denominated covered bonds publicly. He added that the other main advantage of the new programme is that its issuance will be eligible for Eurosystem credit operations, whereas issuance out of the domestic programme was ineligible.

mBank CEO Cezary Stypułkowski has previously stated that the bank might issue larger euro-denominated covered bonds publicly in the future, but said this would depend on the group’s liquidity position and market conditions.

“We are technically ready for a benchmark issue – the programme is established, we maintain a sufficient cover pool, and have mandated joint lead managers,” added Zdunkiewicz, “although the market holiday period has begun and our semi-annual results are to be published on 4 August, so for now we do not have plans to issue.”

Commerzbank is the arranger of the new programme, Commerzbank, Erste Group Bank, JP Morgan, LBBW and Société Générale are the dealers.

PKO Bank Hipoteczny is the only Polish issuer to have sold benchmark euro covered bonds to date.

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