Warsaw Stock Exchange: Three Years Of Catalyst

• 147 Polish and international issuers, including 49 new listings in 2012
• Over 300 series of corporate, co-operative and municipal bonds worth over PLN 45 billion
• New listings of bonds of the biggest Polish companies including WIG20 participants
• WSE’s efforts to stimulate interest of individual investors

Three years ago, on 30 September 2009, the WSE opened the Catalyst market in order to create an organised, transparent and safe market of debt instruments issued by corporates and local governments in Poland. Since July 2010, Catalyst also lists debt instruments of co-operative banks for which the market opened the door to raising funds on the public capital market.

Catalyst currently lists 302 series of bonds issued by 146 non-Treasury entities (113 companies, 22 co-operative banks and 11 local governments) in an aggregate value of issue exceeding PLN 45 billion.

The three years of operation of Catalyst have proved that the project has made a major difference to the architecture of Poland’s debt instruments market and addressed the needs of issuers and investors. This is demonstrated among others by the fast-growing number and value of issues of bonds listed on Catalyst despite the economic slow-down in Poland.

Source: WSE data as at August 2012, by quarter

The group of issuers of debt securities is steadily growing as Catalyst has opened for them new funding opportunities while listing on the transparent public bond market entails more prestige, investor confidence and excellent promotion. The number of entities which have introduced bonds to the WSE’s debt instruments market has grown particularly fast in 2012 as bonds of 49 new issuers have been introduced to trading year to date and the value of instruments listed on Catalyst as at the end of August has grown by 40 percent year on year.

Source: WSE data as at August 2012, by quarter

The biggest Polish companies have had their bonds listed on Catalyst including Polkomtel, PKN Orlen and PGNiG as well as banks including BOŚ, PKO BP and Pekao Bank Hipoteczny. This group of corporates, many of which participate in the WIG20 index, is best proof that the WSE’s debt instruments market creates a new reality where companies are funded not only through bank loans but also with bonds available to investors in exchange trading. The value of capital raised through bond issues has been growing steadily in proportion of bank lending, still the most popular form of financing for corporates and local governments.

Historically biggest bond issues introduced to Catalyst: 

*Polkomtel redeemed bonds in June 2012
**Pekao Bank Hipoteczny bonds are listed in EUR
Source: WSE data

The capitalisation of bonds listed on Catalyst accounts for around 86 percent of the value of all bonds issued by banks in Poland, the capitalisation of bonds issued by corporations around 30 percent, and by local governments ca. 16 percent.

In Q2 2012, the value of debt issued by Polish corporates and financial institutions was at 6 percent of the Polish GDP. This is less than in other countries of the region and much less than in Western Europe. However, Polish companies increasingly understand that the more sources of funding there are, the bigger the competition among their suppliers and, consequently, the lower the cost of capital. As a result, the value of bonds of financial institutions and corporates to GDP has doubled over the past three years since the WSE opened Catalyst.

Source: BIS (as at December 2011, local and international issues), Fitch (only for Poland, as at June 2012, only instruments with maturities over 1 year, local and international issues), Eurostat (GDP for 2011)

In the time of high uncertainty on the financial markets, Catalyst has become very attractive both to issuers and investors. This is demonstrated by the number of transactions which has been rising fast quarter by quarter in 2012.

Turnover in bonds has also grown year on year. In January – August 2012, session trading on Catalyst reached PLN 1.1 billion and total trading was PLN 2.2 billion, up by 27.1 percent and 131.6 percent, respectively, year on year.

The structure of the market including the retail trade segment makes Catalyst an interesting offer which allows to effectively diversify investment portfolios and invest savings at a profit, now also for individual investors who previously had no access to the public market of non-Treasury debt instruments.

“More activity of individual investors on the Catalyst market is necessary to ensure its further growth; this is why we are constantly working to strengthen demand on their part. We were a pioneer when we issued WSE bonds and decided in the prospectus to address a PLN 75 million tranche exclusively to individual investors in order to promote this model. This year, big issuers have announced that they will be preparing issues worth hundreds of millions specifically for individual investors. This in turn will drive more trading and then I can boldly say that the WSE’s efforts aiming to create yet another element of the Polish capital markets have been successful. Currently, the value of bonds issued by corporates is 5–6 percent of GDP and, as I often stress, indicates the great potential of non-Treasury bonds. Working on it will certainly be one of the strategic directions of growth of the Polish capital markets pursued by the WSE and many other financial institutions,” said CEO and President of the Warsaw Stock Exchange Ludwik Sobolewski.