Fitch Rates Bank Gospodarstwa Krajowego's Upcoming Issue 'A-(EXP)'
OREANDA-NEWS. Fitch Ratings has assigned Bank Gospodarstwa Krajowego's (BGK) planned debut issue of up to EUR500m state-guaranteed senior eurobonds an expected Long-term foreign currency rating of 'A-(EXP)'.
The assignment of the final rating is contingent on the receipt of final documents conforming to information already received.
KEY RATING DRIVERS
The notes' rating is in line with the 'A-' Long-term foreign-currency Issuer Default Rating (IDR) of the Republic of Poland. This reflects the unconditional and irrevocable state guarantee for the issue, which covers payments of both principal and accrued interest, and Fitch's expectation that the sovereign will honour the guarantee provided to noteholders fully and in a timely manner. The state guarantee ranks pari passu with Poland's other unsecured senior obligations.
The bonds will be issued under an EMTN programme of up to EUR1bn, which allows for the issuance of various types of notes. Each series of notes issued under the programme is subject to a separate guarantee, and each guarantee will need to be approved by the State Treasury of the Republic of Poland on an issue by issue basis. Each guarantee will be limited to 140% of the principal value of the relevant series of notes.
Proceeds from the issue will be used to finance the National Road Fund. The Fund is not incorporated as a legal entity, and its assets and liabilities are booked off-balance sheet by BGK.
BGK is the issuer of the notes under the programme and, according to the draft issue documentation, the notes "constitute direct, general and unconditional obligations of the issuer". However, the documentation also states that "any payments under debt securities issued by BGK to finance the National Road Fund (including any notes to be issued under the programme) may only be made from the National Road Fund's funds and not from other funds or assets held by BGK". In Fitch's view, this gives rise to some ambiguity as to the extent of recourse to BGK under the notes. However, this does not affect the rating of the notes, given that the rating is driven by the state guarantee.
The notes' Long-term rating is sensitive to changes in Poland's Long-term foreign currency IDR. Changes to Poland's Long-term foreign currency IDR would be reflected in the note's Long-term rating.