BGK May Sell More Bonds to Fund Polish State Investments

Bank Gospodarstwa Krajowego, the Polish state-owned bank which finances government investments, may return to the bond market in the second half of the year, offering as much as 1 billion zloty ($322 million) of debt.

The Warsaw-based bank may issue bonds with maturity of at least five years, deputy Chief Executive Officer Andrzej Ladko said in an interview today. The lender hasn’t yet decided on whether to sell the debt on the domestic or foreign markets.

In October BGK issued 1 billion zloty of bonds due in 2018 and last month the bank sold its entire 10.2 percent stake in PKO Bank Polski SA, the country’s biggest lender, for 4.39 billion zloty.

“Our liquidity position is very good after the PKO sale and we don’t have any immediate debt sale plans now,” Ladko said. “We don’t rule out a possibility of a debt sale in the second half.”

The bank’s solvency ratio jumped to more than 56 percent from 17 percent after the sale of the PKO stake, boosting its lending capacity as the government plans more investment in roads, pipelines and power plants to prop up the economy, Chief Executive Officer Dariusz Daniluk said last month.

The government said last year that BGK’s capital will be raised by 10 billion zloty in the next few years by transfering stakes of state-controlled companies, which in the past had been used to fund the budget deficit. The increase will allow BGK to lend 40 billion zloty for investments. At the same time the state is setting up Polskie Inwestycje Rozwojowe SA, a company that will act as a private equity fund to provide further capital for the projects.