Polish Insurer PZU selling Eurobonds to buy RSA units

PZU SA, Poland’s largest insurer, is selling 500 million euros ($681 million) of five-12 months bonds to help finance an acquisition.

The state-managed insurer is tapping the marketplace after the european important bank reduce its deposit charge under 0 to fight the risk of deflation, pushing investors to are looking for higher- yielding assets. Warsaw-primarily based PZU is selling debt to assist fund its buy of RSA insurance organization percent’s units inside the region, the largest foreign acquisition by means of a Polish financial corporation.

PZU is providing debut benchmark notes at a spread of 85-90 foundation factors above midswaps, in line with someone acquainted with the transaction who asked not to be identified because the records is personal. that might be the bottom charge for a similar-adulthood bond from an east eu enterprise due to the fact Czech electricity manufacturer CEZ AS issued debt with a 63 foundation-point unfold in October 2007.

“It’s actually an attractive spread for PZU, ecu investors and nearby budget,” Olaf Pietrzak, head of debt funding at Warsaw-based Skarbiec TFI SA, which has 14.7 billion zloty ($4.8 billion) underneath management, said via email these days. every other tremendous component is that PZU gives “a semi- sovereign debt that may be without problems repaid,” he stated.

PZU’s long-time period local forex score is about at A with the aid of wellknown & negative’s, 5 steps above junk, on par with the sovereign. PKO bank Polski SA, the nation’s biggest lender, bought 500 million euros of five-12 months debt in January at one hundred fifteen foundation points above midswaps at the same time as PGE SA, Poland’s largest strength software, raised the same quantity through a sale of 5-12 months securities earlier this month at ninety eight basis factors above mid- swaps.

“It’s an amazing selection to come back to the market now because there is lots of cash after the ECB easing,” Marcin Grotek, who manages the equivalent of $360 million of debt at Warsaw- based MWealth control SA, stated by electronic mail these days. “As for the spread I don’t see a premium for a debut bond sale.”

bank of the usa Merrill Lynch, Citigroup Inc., Deutsche financial institution AG, Goldman Sachs group Inc. and u.s.a. were hired to control PZU’s supplying.