OTP Bank Preparing a Euro Bond Issue

OTP Bank is preparing a three-year green bond issue in euro, Global Capital reported. According to the portal, investors were sounded out on Wednesday and Thursday, and the bond is expected to be issued early next week.

According to the plans, the bond would not be callable in the first two years of its maturity, but would be callable in the last year. Its classification is senior, and it also complies with the so-called 144A rule, making it suitable for standard trading. The Hungarian financial institution was last mandated to organize a bond issue in January, when it planned to launch a 10.25-year subordinated loan bond, which would be non-redeemable for 5.25 years and qualify as Tier 2 capital.

At that time Citigroup, JP Morgan, Société Générale and OTP participated in the organization, and now BNP Paribas, Erste and ING have been invited to participate alongside the parent bank.

According to analysts, the timing of the bond issue by OTP cannot be a coincidence, as the European Central Bank has clearly communicated its intention to raise interest rates and the timing is known. It is also possible that the funds raised will be used to buy back perpetual bonds on the market, which currently pay a rate of 300 basis points above the 3-month Euribor (minus 0.191% on June 29).