Favourable issuance spread and multiple oversubscription

published atFebruary 5, 2025Tags:analyses

The market seems to have confidence in the stable operation of OTP Bank Hungary

Last week, OTP Bank Hungary issued a total of USD 750 million of subordinated capital (Tier2), which was subscribed by investors at an all-time-low spread.

Budapest, 30 January, 2025 - OTP Bank Hungary recently completed its largest bond issuance in recent years: the credit institution issued subordinated liabilities in the amount of USD 750 million. The bonds with 10.5 years maturity, redeemable any time during the 6-month period prior to 5.5 years were issued at a spread of just 286 basis points above the US Treasury benchmark, significantly narrower than that of the comparable issuance in 2023.

“The favourable spread and the multiple oversubscription seen on our latest bond issuance confirm that OTP Bank’s safe and sound operation is backed by strong investor confidence on the market" said Attila Bánfi, Managing Director of OTP Global Markets.

The bonds of OTP Bank were distributed among 170 investors from around the world. The vast majority (84%) were fund managers, but banks and international financial institutions were also involved in the subscription. “It was the largest order book ever in OTP Bank’s history, with a total of USD 2.7 billion of orders received for our bonds, which is nearly a three and a half times oversubscription. The allocated amount of USD 750 million was also a record, making it the largest issuance in recent years” added the Managing Director.

In terms of the geographical distribution of investors, the UK and the US accounted for the largest share of subscribers, while the Central and Eastern European region represented almost 15% of the allocations. Besides OTP Global Markets, the join lead managers of the transaction were BNP Paribas, Goldman Sachs, JP Morgan and Morgan Stanley.

“In recent years, we have completed a total of ten public issuances, as well as several private and bilateral transactions, making OTP Bank the largest independent regional bond issuer in terms of total issued amount” said Sándor Pataki, Head of Investor Relations and Capital Markets Operations at OTP Bank Hungary.

This year, OTP Bank Hungary is planning to issue another benchmark bond, the terms of which will be communicated to market participants in due course by the credit institution.