The part of regulations, which are currently in force, was introduced in 1989 in another economic reality. In consequence of the omissions of the following rules, companies still have to pay higher interests for issuing a debt or contracting credits in banks. Presently, we have a project of a new bonds act, we have regulations concerning the change of a bank law which will enable banks the investment in bonds. In my opinion, one of the very crucial problems which concern bonds is the matter of guaranteeing that money which has been invested will be reclaimed. In other words, it is a matter of the protection of bonds as well as the whole system which leads to recovery of the money which was lent to someone – says Marek Wierzbowski, partner in Prof. Marek Wierzbowski and Partners – Advocates and Legal Counselors office.
The project of the bond act amendment envisages the extension of the catalogue of entities entitled to issue bonds with foreign and special-purpose partnerships created with intention to issue of longer financial instruments. The important change will be also the possibility of subordinated or perpetual bonds’ issue and introduction of bondholder assembly institution. These are beneficial changes. Moreover, rating is also important. On the other hand, we should bear in the mind that the acquisition of corporate bonds of the partnership is the same as the fact of lending it some money. We bear risk. Ordinary interest is here much more high than the one which is paid concerning deposits by banks. However, the safety may be also lower – thinks Marek Wierzbowski.
Nowadays, the corporate bonds market in Poland is dominated by banks which generate almost 90 per cent of dealings, and the level of non-fiscal indebted instruments’ development is the result of not only actual regulations, but also market conditions in the past such as high rates of interest and inflation. Until recently, bonds have been an instrument of the third choice. The first was the emission of stocks, especially in a situation when we had to deal with very high rates of interest and simultaneously well-developed infrastructure to the emission of stocks. The second choice was bank financing because it is the easiest – explains Mirosław Kachniewski, chairman of the Stowarzyszenie Emitentów Giełdowych board.
The advantage of the bonds is the flexibility which is given to companies in the term of the investment project’s realization because till the moment of the purchase only coupon interests are repaid – if the bond includes a coupon. It significantly facilitates financing of investment projects which are characterized by time-lag cash flows. The second issue is that we are not so strongly bound with different conventions. The issuer does not have so many difficulties with acting than in such strongly defined by bank frameworks. It may sometimes cause some difficulties in financing or increase of the price of this financing, which is more expensive than obligation financing at the end – says Kachniewski.
The emissions placed on the market may be also an important bargaining counter while negotiating the lending rate of bank credits.