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Hogan Lovells and White & Case Advise on EUR 3 Billion Mortgage-Covered Bonds Program in Poland

Hogan Lovells and White & Case Advise on EUR 3 Billion Mortgage-Covered Bonds Program in Poland

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Hogan Lovells has advised mBank Hipoteczny S.A. on establishing a mortgage-covered bonds program up to the maximum total nominal value of EUR 3 billion (or the equivalent in another currency). White & Case was the counsel for both program arranger and dealer Commerzbank AG and other dealers, which include Erste Group Bank AG, J.P. Morgan Landesbank Baden-Wurttemberg, and Societe Generale Corporate & Investment Banking. The program instituted by mBank Hipoteczny S.A. is the second international program for the issuance of covered bonds established by a Polish mortgage bank.

On July 6, 2017, the Luxembourg Financial Sector Supervision Authority approved the base prospectus prepared in connection with the admission of the covered bonds issued under the EUR 3 billion program to the regulated market of the Luxembourg Stock Exchange. The minimal nominal value of each covered bond is EUR 100,000. Fitch Ratings gave the program an A rating (with a positive outlook).

According to Piotr Zawislak, the Partner leading the Hogan Lovells Warsaw capital markets and structured finance practice who led his firm's team on the deal, “through the establishment of the EUR 3 billion international covered bonds program, mBank Hipoteczny S.A. has proved its position as the leader in the Polish mortgage bank sector, and has secured international sources of financing for its lending activities. According to the issuer, the covered bonds issued under the program are intended to be listed on the Luxembourg Stock Exchange and thus meet the European Central Bank’s eligibility criteria for these debt instruments."

According to Hogan Lovells, "mBank Hipoteczny S.A., which has been present on the Polish market since 1999, is the largest mortgage bank in Poland in terms of total assets and total loan volume, and has the longest history as a covered bonds issuer on the Polish capital market. It plays a leading role on the real estate financing market and issuing covered bonds. mBank Hipoteczny S.A. finances many commercial investments including office buildings, retail space and warehouses, logistic centres and services, hotels, and other commercial properties. In the retail section, mBank Hipoteczny S.A. (in collaboration with its parent company, mBank S.A.) grants mortgage loans to natural persons. The bank's loan offers are complemented by its market analyses and consultancy services addressed to investors and commercial real estate entities."

Also according to Hogan Lovells, "the covered bonds issued by mBank Hipoteczny S.A. constitute the primary source for refinancing its activity. According to bank sources, the total nominal value of the outstanding covered bonds issued by mBank Hipoteczny S.A. amounts to approximately PLN 5.2 billion (as of 30 June 2017).

Covered bonds are debt securities which are issued exclusively by specialist mortgage banks in accordance with the Polish Covered Bonds Act of the 29th August 1997, and are backed by loan receivables secured by mortgages entered in the land and mortgage register with the highest priority. They are therefore, considered one of the safest financial instruments on the capital market."

In addition to Zawislak, the Hogan Lovells team advising mBank Hipoteczny S.A. on Polish-law matters related to the transaction included Warsaw-based Lawyer Artur Bilski, Warsaw-based Partner Andrzej Dębiec and Counsel Zbigniew Marczyk. London-based Hogan Lovells Partner Julian Craughan, Counsel Marc Mouton, and Associate Victoria Hewitson were responsible for the English law issues.

The White & Case team advising the arranger and dealers on Polish law was supervised by Partner Marcin Studniarek, coordinated by Counsel Bartosz Smardzewski, and included Associates Michal Jadwisiak and Katarzyna Grodziewicz, with Counsel Grzegorz Jukiel responsible for tax law advice. London-based White & Case Partner David Barwise and Frankfurt-based Partner Jochen Artzinger-Bolten provided legal advice on English law.

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