Polish state energy giant Orlen raises $1.25 billion in debut North American bond issue

Keep our news free from ads and paywalls by making a donation to support our work!

Notes from Poland is run by a small editorial team and is published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Polish state energy giant Orlen has raised $1.25 billion (over 5 billion zloty) in its first-ever bond issue on the North American market. It will use the money to fund strategic investments, the company said on Wednesday.

Investor interest in the bonds exceeded expectations, with demand more than three times higher than anticipated. The 10-year bonds were issued with a fixed annual interest rate of 6%.

“The number of applicants for the bonds was more than three times the assumed size of the issue, which confirms the international credibility of the company’s new development strategy and the confidence of investors,” Orlen said in a statement.

The company noted that 206 investors worldwide subscribed to bonds worth more than $4 billion during the book-building process. In the final allocation, 6,250 bonds were distributed among 148 investors from 28 countries.

Investors from the United States accounted for the largest share, at 60%. More than 60% of the bonds were acquired by investment funds.

“The best test of the credibility of Orlen’s business strategy is confidence from investors. The fact that demand for our bonds was more than triple the size of the issue proves that our business and the recently presented development plans are building real value,” said Orlen’s CEO, Ireneusz Fąfara.

The company plans to apply for the bonds to be listed on Euronext Dublin, Ireland’s main stock exchange.

Orlen said that the proceeds from the bond issue would enable the company to finance strategic projects, including the development of gas-fired power plants, gas production, the construction of four offshore wind farms, large-scale energy storage facilities, and at least two small-scale nuclear power plants.

Orlen has been active in the North American market for years, operating production assets in Canada while purchasing liquefied natural gas (LNG) in the US through both short- and long-term contracts.

“The volume of US gas [imported into Poland] will increase in the coming years,” Orlen said, adding that it plans to enter the North American midstream market to establish infrastructure for LNG imports to Poland.

Orlen is a multi-energy conglomerate with refineries in Poland, the Czech Republic and Lithuania as well as a service station network in Germany, Slovakia, Hungary and Austria. It is expanding its upstream, petrochemical and renewable energy sectors while also planning nuclear projects using small modular reactors (SMRs).

Notes from Poland is run by a small editorial team and published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Main image credit: Orlen press pack 

Alicja Ptak

Alicja Ptak is senior editor at Notes from Poland and a multimedia journalist. She previously worked for Reuters.