September 6, 2019 / 3:00 PM / 4 months ago

4iG steps up as Hungary's corporate bond scheme gathers speed

* Central bank launched bond-buying scheme in July

* Aims to kick-start liquid corporate bond market

* 4iG shareholders approve up to 30 bln forints bond issue

* Over 100 companies registered in NBH programme


By Krisztina Than

BUDAPEST, Sept 6 (Reuters) - Hungarian IT company 4iG plans a bond issue to help finance its expansion, as part of the central bank’s new corporate bond-buying programme, the company’s chairman and chief executive said on Friday.

The planned bond issue of up to 30 billion forints, approved by 4iG’s shareholders on Thursday, is set to become one of the first transactions under the auspices of the National Bank of Hungary’s programme, which began in July.

The central bank said the programme would spend up to 300 billion forints ($1.00 billion) to buy bonds issued by Hungarian companies. The aim is to create a liquid corporate bond market and provide an alternative form of financing for domestic companies.

Gellert Jaszai, who took control of 4iG CEO earlier this year by agreeing to buy a 40% stake from Lorinc Meszaros, a childhood friend and ally of Prime Minister Viktor Orban, said the bond issue would help finance their acquisitions.

“4iG management would use the resources to implement the group’s growth strategy, including ongoing acquisitions and future planned acquisitions,” Jaszai, who is now the company’s chief executive, said in an email to Reuters.

The company announced in July that it had signed a preliminary deal to buy its much bigger rival T-Systems, which is owned by Magyar Telekom.

Jaszai said the company could finance this deal from bank loans alone, but it was striving for a healthy capital and credit structure. And the bond issue under the NBH programme was cheaper than a bank loan.

The holding company Opus Global, part-owned by Meszaros, ,has also signed up for the NBH programme and plans a 28.6 billion-forint bond issue, it announced last week. It wants to use the money for debt refinancing and acquisitions.

In a reply to Reuters questions, the central bank said that so far eight companies have received the necessary ratings to take part in the programme, of more than 100 companies that had registered.

The NBH said preparations for the bond issues of the eight companies were under way. 4iG is waiting now to receive its rating.

The eight companies include car parts firm Unix Auto Kft, one of the leading construction companies, Market Epito Zrt, and a biorefinery company, Pannonia Bio Zrt.

The central bank will buy a maximum of 70% of an individual bond series. Its exposure cannot exceed 20 billion forints per company.

Peter Virovacz at ING Bank said the NBH programme was a good initial step to build a corporate bond market and provide financing for strong Hungarian medium-size or large companies. Its moderate size at this stage keeps its risks limited, he said.

“The central bank said that anybody can take part who has a good enough rating and, it works on a first-come, first-served basis,” Virovacz added. (Reporting by Krisztina Than, editing by Larry King)

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