Weak start for public issuances in 2024 despite records in the covered bond market

The public issuance market is weakening, but a record will still be set thanks to covered bonds

This year’s public issuance figures look weak, also compared with last year. As Emil Szweda from Obligacje.pl sees it, the market value record will still be broken, but not thanks to classic bond issues, only covered bonds.

That is an important distinction for retail investors. A covered bond is a debt security backed by mortgages, and therefore seen as safer than ordinary corporate bonds. In practice, it means that some capital is now looking for less risky places when the market lacks a broader range of offerings.

In the first half of 2024, investors were offered participation in fifteen prospectus-based public issues. In the first half of last year there were eleven, and in the first half of this year so far only four such offerings have been carried out. This shows that the number of offers for retail clients has clearly shrunk.

According to Szweda, the value record will be driven by mortgage covered bond issues from PKO Bank Hipoteczny and mBank Hipoteczny. PKO BP has prepared a 1-billion issue, while mBank Hipoteczny is now placing 0.5 billion złoty with an option to increase the issue to 1.0 billion złoty.

So for now, there is no abundance of choice. At the same time, however, the retail market has received a new offer from mBank Hipoteczny, which may matter for people looking for an alternative to deposits and standard savings accounts.

The analyst noted that the interest rate for retail investors is clearly lower than in the offer for professionals from last autumn. Even so, demand may hold up, because with such a small number of issues many savers simply do not have much choice today.

The issue is aimed primarily at mBank’s retail clients. For this group, it is an additional way to place money, and for other investors it is also a supplement to a market that has been exceptionally limited in recent months.