EM CEEMEA CREDIT: PKNPW: FV for potential follow on mandate
Orlen (PKNPW; A3/-/BBB+)
New issue deal mandate: USD 10Y benchmark
- PKNPW has mandated banks for deal related investor calls, suggesting a debut USD 10Y benchmark may follow. That would indicate a potential Jan35 maturity.
- Our analysis suggests FV @ z+185bp area, approximately 50bp premium vs sovereign POLAND 5.125 Sep34 (@ z+136bp). We extrapolate the proposed 10Y tenor by looking at seasoned EUR PKNPW benchmarks, with x-ccy adjusted z-spreads for PKNPW 1.125 May28 @ z+116bp (z+95bp in EURs) and PKNPW 4.75 Jul30 @ z+141bp (z+122bp in EURs).
- When looking at the shape of the seasoned EUR PKNPW curve, we contrast it to the steeper EUR CZGRID (-/BBB+/BBB+WP) curve, a natural gas distribution network in neighbouring Czechia.
- We also refer to longer dated Polish, government-guaranteed USD BGOSK (A2/-/A-) 5.75 Jul34 charting @ z+168bp. Our FV comes @ +10bp pick up vs extrapolated BGOSK.
- Both POLAND and BGOSK secondary curves show some spread pick up for USD vs post x-ccy adjustment EUR bonds. Hence, we would consider adjusting the FV similarly.
As a 49.9% government owned, integrated energy company, Orlen’s operational activities are segmented across four core pillars, Upstream & Supply, Downstream, Energy, Consumers & Products. Management is focused on delivering a group strategy 2035 aimed at asset decarbonization and energy transition (from coal to renewables), with a more diversified EBITDA composition away from upstream business. At 9M24, Netdebt/EBITDA stood @ 0.04x, with group revenues of PLN219.4bn and EBITDA @ PLN27.3bn. CAPEX was @ PLN20.8bn.
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