Clifford Chance advised mBank Hipoteczny on the bank’s second-ever foreign issuance of mortgage bonds.
The bank placed on the Euromarket a bond issue of 300m euro, maturing in September 2025.
The issuance drew a great deal of interest from investors. During book building, over 1bn worth of bids were collected from over 70 real-money investors (i.e. investment and pension funds). The final book consisted of European investors, predominantly from Germany, Scandinavia and Austria. The bonds were allocated mainly to funds (55%) and banks (28%). The issued bonds are listed on the Luxembourg Stock Exchange.
In order to hedge against the FX and interest rate risk resulting from the issuance of covered bonds denominated in EUR, which will be used to finance a PLN credit portfolio, a specially constructed derivative instrument, consisting in a cross-currency interest rate swap (CIRS) was used. The particularity of this kind of transaction lies in the fact that it cannot be terminated when the issuer becomes insolvent and in securing the counterparty’s rights on the same level as the rights of the covered-bond holders by entering the transaction into the register of security of mortgage bonds.
The use of the hedging transaction had a significant impact on Moody’s rating – the bond issue was rated Aa3. It is worth adding that this is the first swap of this kind in Poland with an external counterparty and that in Europe only a few similar instruments were used.
The transaction team were led by Grzegorz Namiotkiewicz (Picture – Partner and Co-head of the Banking and Finance Practice in the Warsaw Clifford Chance office) and David Dunnigan (Partner in the Capital Markets Practice in London). Further team members included: Grzegorz Abram (Counsel heading the Debt Capital Markets Group in Warsaw), Aleksandra Rudzinska (Senior Associate in that group), Roksana Kaluzna (Junior Associate in that same group), Eric Green (Senior Associate in the Capital Markets Practice in London), as well as Ayan Koshal (Senior Associate in that practice). The work on the swap transaction was conducted by Andrzej Stosio (Partner and Co-Head of the Banking and Finance Practice in Warsaw), Aleksandra Rudzinska and Daniel Deacon (Senior Associate in the London Banking and Finance Practice).
Involved fees earner: Grzegorz Abram – Clifford Chance; Daniel Deacon – Clifford Chance; David Dunnigan – Clifford Chance; Eric Green – Clifford Chance; Roksana Kalu?na – Clifford Chance; Ayan Koshal – Clifford Chance; Grzegorz Namiotkiewicz – Clifford Chance; Aleksandra Rudzi?ska – Clifford Chance; Andrzej Stosio – Clifford Chance;
Law Firms: Clifford Chance;
Clients: mBank S.A.;