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Poland's PKO Leasing launches 2.5B zloty securitization deal with EIB's support

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Poland's PKO Leasing launches 2.5B zloty securitization deal with EIB's support

PKO Bank Polski SA unit PKO Leasing SA launched a securitization transaction involving the sale of 2.5 billion Polish zlotys worth of asset-backed securities to a group of international investors, including the European Investment Bank Group and Citigroup Inc. unit Bank Handlowy w Warszawie SA.

The European Investment Bank will subscribe to 900 million zlotys of senior notes under own risk and 640 million zlotys of mezzanine notes under the guarantee provided by the European Fund for Strategic Investments, which is part of the Investment Plan for Europe, also known as the "Juncker Plan."

The senior notes, including class A-1 notes and class A-2 notes, and the mezzanine notes — class B notes — were issued under the deal by Polish Lease Prime DAC at 100% of their issue price and are due in 2029. A portion fo the class A-1 notes were purchased by the EIB Sept. 26, and the mezzanine notes were purchased by PKO Leasing and will be sold to the EIB in February 2020. The EIB class A-1 notes bear interest at a rate of three-month Warsaw Interbank Offer Rate plus a margin of 0.7%, while the mezzanine notes have a margin of 2.5%.

Both senior and mezzanine notes are backed by a pool of assets comprised of leasing receivables originated by PKO Leasing during its ordinary business activities in Poland.

The European Investment Fund, which is part of the EIB Group, is participating in the transaction as a guarantor of 390 million zlotys worth of senior notes and will also act as an advisor to the EIB for the senior and mezzanine investments.

The deal will be the first in Poland to meet the requirements of the Simple, Transparent and Standardized, or STS, transaction under the European Commission's regulation 2017/2402, and one of the first STS eligible operations subscribed to by the EIB, the financial institution said in its Sept. 26 filing.

The funding and capital relief generated as a result of the deal will be used by PKO Leasing to increase its activities and facilitate greater access to finance for the country's micro, small and medium-sized businesses across all industries. The EIB's participation in both tranches is expected to generate almost 4.36 billion zlotys of new financing which will be allocated in line with the EIB's requirements under the deal to support the Polish economy.

As of Sept. 26, US$1 was equivalent to 4.01 Polish zlotys.