Flexible bonds

According to our analyses, in 2013 developers in Poland issued corporate bonds worth app. PLN 1.8 bln. This is almost 40 pct more than the year before (PLN 1.3 bln). It is a slightly more expensive solution compared to loans, for instance, but in many cases bond issue conditions can be individually adjusted to the needs of a given enterprise.

It is worth pointing out that banking institutions often impose requirements that limit the possibility of further equity raising for individual development projects. In the case of a bond issue the individually adjusted issue conditions make it possible to establish a maximum debt level up to which companies can acquire further financing from sources other than bonds. In addition, on the Polish corporate bond market issuers with a good financial standing are able to issue unsecured bonds, which is impossible in the case of a bank loan.

An issuer can choose from a private or public bond issue. The most important difference between the two issue modes consists in the number of potential investors to whom the bond purchase offer can be addressed. In the case of a non-public offer, the bond purchase proposal can be addressed to a maximum of 149 investors. A public issue requires an information document to be approved by the Financial Supervision Authority (KNF), which then prolongs the bond issue process. Non-public issues are currently the most popular on the Polish market. Over the last two years they constituted over 95 pct of all the bond issues. However, due to the recent changes in the legislation regarding the organisation and functioning of pension funds, it should be expected that there will be more public issues to make is possible for pension funds to participate in them.