Debt Market POLISH NON-GOVERNMENT DEBT MARKET: Q3 2010 SUMMARY At the end of Q3 2010, the value of the non-government debt market broke PLN 63,2 bn, which represents a 47% increase during the last 12 months. In comparison to the end of last quarter, it rose by 7,7%. Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Total debt value 42 486,08 41 840,63 43 015,92 47 999,87 50 704,25 58 789,07 63 295,85 dynamics (annual) 1,3% -6,1% -8,0% 7,3% 19,3% 40,5% 47,1% dynamics (quarterly) -5,1% -1,5% 2,8% 11,6% 5,6% 15,9% 7,7% Commercial Paper 12 321,84 11 560,35 12 178,25 9 969,92 10 675,00 11 350,86 14 019,65 dynamics (annual) -3,0% -16,8% -18,3% -23,0% -13,4% -1,8% 15,1% dynamics (quarterly) -4,9% -6,2% 5,3% -18,1% 7,1% 6,3% 23,5% Corporate bonds 13 839,36 13 924,05 13 753,63 12 158,23 13 968,93 14 771,43 16 403,62 dynamics (annual) -1,1% -5,6% -9,2% -18,6% 0,9% 6,1% 19,3% dynamics (quarterly) -7,4% 0,6% -1,2% -11,6% 14,9% 5,7% 11,0% number of issuers 85 83 78 71 86 95 99 Bank debt 11 935,13 11 749,27 11 648,21 18 965,64 18 970,20 24 704,42 23 703,20 dynamics (annual) 7,2% -0,2% -7,2% 53,0% 58,9% 110,3% 103,5% dynamics (quarterly) -3,7% -1,6% -0,9% 62,8% 0,0% 30,2% -4,1% number of issuers 20 19 15 14 14 19 23 Municipal bonds 4 389,75 4 606,96 5 435,83 6 906,08 7 090,13 7 962,36 9 169,38 dynamics (annual) 6,3% 11,3% 31,3% 54,8% 61,5% 72,8% 68,7% dynamics (quarterly) -1,6% 4,9% 18,0% 27,0% 2,7% 12,3% 15,2% number of issuers 366 372 393 415 417 432 448 Non-government debt market structure by issues placed in Q3 2010 Corporate bonds 46,69% Non-government debt market (as of September 30, 2010) Commercial Paper 22,15% Corporate bonds (over 365 days maturity) 25,92% Municipal bonds 36,85% Bank debt 16,46% Municipal bonds (over 365 days maturity) 14,49% Bank debt (over 365 days maturity) 37,45% Statistics of the non-government debt market, September 30, 2009 September 30, 2010 (PLN mln) Commercial Paper Corporate bonds Bank debt Municipal bonds 60 000 50 000 40 000 30 000 20 000 10 000 0 2009-09-30 2009-10-31 2009-11-30 2009-12-31 2010-01-31 2010-02-28 2010-03-31 2010-04-30 2010-05-31 2010-06-30 2010-07-31 2010-08-31 2010-09-30 1
Non-government debt market flows in 2010, as of September 30, 2010 Q1 2010 PLN mln Q2 2010 PLN mln Q3 2010 PLN mln Issues Introduced Redempt Introduced Redempt Introduced Redempt corporations 1 693,96 151,90 1 281,13 362,49 1 699,27 317,66 banks 122,28 76,06 6 177,83 533,14 599,23 1557,06 municipalities 362,96 20,56 928,26 210,97 1 340,99 113,90 Total 2 179,20 248,52 8 387,22 1 106,60 3 639,49 1 988,62 Bonds placed in Q3 2010 - lead manager's share Other 12,68% Pekao S.A. 46,20% PKO Bank Polski 10,14% BRE Bank 10,16% Nordea Bank Polska 20,82% Commercial Paper (CP) Market In Q3 2010 the value of Commercial Paper debt market reached PLN 14,02 bn, an increase of 15,1% y/y, and quarterly dynamics of +23,5%. There are 16 lead managers and dealers on the market, with 5 largest: Pekao SA, PKO BP, BRE Bank, Bank Handlowy, ING Bank Śląski holding a total market share of 89,7%. CPs constituted 22,15% of the total market value. Market share of leading CP organizers by debt value Pekao SA PKO BP BRE Bank Bank Handlowy ING Bank Śląski Other 19,6% 17,0% 16,8% 15,3% 14,8% 8,7% 11,9% 10,3% 9,5% 23,4% 25,3% 27,4% 2010-09-30 2010-06-30 0% 5% 10% 15% 20% 25% 30% 2
Corporate Bond Market (with maturities over 365 days) In Q3 2010 the value of the corporate bond market with maturities over 365 days amounted to PLN 16,4 bn. Quarterly dynamics were +11%, while yearly amounted to +19,3%. In Q3 2010 new issues with a total value of PLN 1,67 bn were placed on the market by: ABM Solid S.A., Dom Development S.A., Energa- Operator S.A., Fast Finance SA, Gant Development, Inpro SA, Integer SA, Kruk SA, Magellan SA, Mera SA, Mex Polska S.A., MZCh Organika SA, PKP, Polkomtel Finance AB, Sygnity S.A., UWI Inwestycje SA, Volksvagen Leasing Sp. z o.o. Corporate bond issues constituted 25,92% of the total market value. Dom Maklerski Banku BPS/ Bank BPS 3,36% Corporate bonds placed in Q3 2010 - lead managers' share Other 4,14% Pekao SA 58,97% BRE Bank 4,11% Nordea Bank Polska 29,42% Bank Debt Market (with maturities over 365 days) The value of outstanding bank debt, with maturities over 365 days amounted to PLN 23,7 bn. Yearly dynamics amounted to +103,5% and quarterly decrease of -4,1%. In Q3 2010 there were issues of Bank Millenium, Bank Polskiej Spółdzielczości, ESBank BS w Radomsku, Mazowiecki BS w Łomiankach, Santander Consumer Bank S.A., SBR w Szepietowie and mortgage bonds by BRE Bank Hipoteczny. The total value of all these issues amounted to PLN 599,23 mln. Bank non-government debt issues constituted 37,45% of the total market value. Bank debt placed in Q3 2010 - lead managers' share Pekao S.A. 26,70% BRE Bank 50,06% Bank BPS/Dom Maklerski BPS 16,02% Bank Millennium 7,21% 3
Municipal Bonds (with maturities over 365 days) In Q3 2010 the value of the municipal market amounted to PLN 9,17 bn. Yearly dynamics were 68,7%, while quarterly amounted to 15,2%. In Q3 2010 new municipal bonds with total value of PLN 1,3 bn were issued by municipalities: Aleksandrów Łódzki, Barlinek, Białystok, Biecz, Bielawa, Bogdaniec, Brodnica, Brzeg Dolny, Brzesko, Buk, Cewice, Chełm, Chęciny, Chojna, Cieszanów, Cieszków, Czarna Dąbrówka, Czarne, Dęblin, Dobiegniew, Dobroszyce, Drobin, Duszniki-Zdrój, Dywity, Elbląg, Ełk, Garbatka-Letnisko, Gdańsk, Głuszyca, Gniewino, Gołcza, Gronowo Elbląskie, Grójec, Grudziądz, Gubin, Inowrocław, Jabłonowo Pomorskie, Jarocin, Jastków, Jawor, Jaworzyna Śląska, Jedlina Zdrój, Jednorożec, Kartuzy, Kobylanka, Kołobrzeg, Komorniki, Konopiska, Końskie, Koronowo, Kościan, Kórnik, Krasnobród, Krobia, Krzeszyce, Krzyż Wielkopolski, Książ Wielki, Książ Wielkopolski, Leszno, Lębork, Lipno, Łapy, Łeba, Łobez, Łomianki, Małomice, Margonin, Męcinka, Miastko, Miastków Kościelny, Miejska Górka, Mielno, Miękinia, Mława, Mogilany, Moryń, Mosina, Murowana Goślina, Nagłowice, Nidzica, Nowa Ruda, Nowa Wieś Lęborska, Nowe Skalmierzyce, Obryte, Olecko, Olesno, Oleśnica, Olkusz, Opalenica, Orneta, Ostrołęka, Ostrów Wlkp., Oświęcim, Pabianice, Pakosław, Pełczyce, Pilawa, Polanów, Połczyn- Zdrój, Poznań, Prabuty, Prażmów, Przasnysz, Przodkowo, Pułtusk, Pyrzyce, Raszyn, Rydzyna, Ryki, Rzeszów, Sandomierz, Sędziszów, Sędziszów Małopolski, Siedlce, Sieradz, Skarbimierz, Skoczów, Słupsk, Sokołów Podlaski, Starachowice, Stargard Szczeciński, Stąporków, Sulejówek, Swarzędz, Szczawnica, Szprotawa, Śrem, Świdnica, Świeradów Zdrój, Świętochłowice, Tczew, Trzebiatów, Turawa, Turek, Ustka, Ustronie Morskie, Wałbrzych, Warnice, Wągrowiec, Węgrów, Widuchowa, Włocławek, Wodzisław Śląski, Wołomin, Wołów, Wrocław, Wschowa, Zamość, Zawonia, Zgorzelec, Zielonka, Zielonki, Żmigród, Żyrardów; counties: Gniezno, Grójec, Jawor, Kartuzy, Kościerzyna, Krotoszyn, Milicz, Oborniki Śląskie, Płock, Puck, Pułtusk, Sochaczew, Starachowice, Świebodzin, Toruń, Trzebnica, Wieruszów, Wołów, Zduńska Wola, Zielona Góra, Żagań, Żary and region of opolskie. Municipal bond issues constituted 14,49% of the total market value. Municipal bonds placed in Q3 2010 - lead managers' share PKO Bank Polski 27,52% Nordea Bank Polska 19,21% Pekao SA 38,73% Other 8,60% BGK 5,93% 4
Investors August 2010 Banks owned: 85,83% of all municipal issues 84,9% of all mortgage bonds 23,03% of all corporate issues and other (non-bank) short-term issues. 21,32% of all bank issues (short- and long-term) Corporates had in their portfolios: 39,79% of all corporate issues and other (non-bank) short-term issues 6,91% of all issues of bank papers. 0,02% of all municipal issues Foreign investors preferred: corporate issues and other (non-bank) short-term issues (5,56%) municipal bonds (3,95%) mortgage bonds (1,85%) bank papers (0,04%). Pension funds invested in: bank bonds (13,53%) corporate issues and other (non-bank) short-term issues (8,71%) mortgage bonds (6,04%) municipal bonds (5,18%) Investment funds had: 25,22% of all issues of bank papers 15,03% of all corporate issues and other (non-bank) short-term issues 5,68% of mortgage bonds 3,28% of municipal bonds Insurance companies held: bank papers (7,21%) corporate issues and other (non-bank) short-term issues (3,41%) municipal bonds (1,58%) mortgage bonds (0,94%) Investors: non-government debt instruments in banks and customers portfolios, as of August 31, 2010 (based on data from 21 banks) Bank debt instruments Other debt instruments () Total Up to 365 days Over 365 days Mortgage Bonds Municipal bonds Total Up to 365 days Over 365 days Total Banks 1 750,00 640,50 1 109,50 1 086,80 4 921,60 6 526,10 2 564,00 3 962,10 14 284,50 Insurance companies 591,80 166,60 425,20 12,00 90,40 967,20 49,70 917,50 1 661,40 Pension funds 1 110,30 170,00 940,30 77,30 296,90 2 469,10 11,10 2 458,00 3 953,60 Investment funds 2 069,80 1 360,50 709,30 72,70 187,90 4 258,70 395,90 3 862,80 6 589,10 Corporates 567,30 456,00 111,30 0,00 2,60 11 276,50 7 408,60 3 867,90 11 846,40 Foreign entities 3,30 0,00 3,30 23,70 226,40 1 576,40 699,00 877,40 1 829,80 Other financial institutions 59,00 59,00 0,00 7,60 1,50 337,60 24,70 312,90 405,70 Other entities 2 056,70 14,00 2 042,70 0,00 6,80 927,60 755,40 172,20 2 991,10 Total 8 208,20 2 866,60 5 341,60 1 280,10 5 734,10 28 339,20 11 908,40 16 430,80 43 561,60 Source: The National Bank of Poland Investors in non-government debt (long- and short-term), as of August 31, 2010 Corporates 27,19% Pension funds 9,08% Investment funds 15,13% Foreign entities 4,20% Other financial institutions 0,93% Insurance companies 3,81% Source: National Bank of Poland, based on data from 21 banks Banks 32,79% Other entities 6,87% 5
Foreign currency Long-term Local currency International ratings Short-term Foreign currency Local currency 6 Individual rating Support rating Support rating floor National ratings Long-term Corporates Aquanet BBB- A (pol) ORBIS BBB+(pol) PGE Polska Grupa Energetyczna BBB+ BBB+ PKN Orlen BB+ BB+ B B Przedsiębiorstwo Wodociągów i Kanalizacji Olsztyn Tauron Polska Energia BBB BBB Telekomunikacja Polska BBB+ F2 Zakład Komunikacji Miejskiej w Gdańsku BBB- A (pol) Financial Institutions Bank Handlowy w Warszawie 1 Bank Millennium A- F2 C/D 1 AA (pol) Bank Ochrony Środowiska BBB F3 D 2 BBB Bank Pekao A- F2 C 1 Bank Zachodni WBK BBB+ F2 C 3 BB BRE Bank A F1 C/D 1 BRE Leasing A F1 1 Short-term Electus B- B- B B B+ (pol) B (pol) Europejski Fundusz Leasingowy S.A. A+ F1 1 AAA (pol) F1+ (pol) Getin Noble Bank BB B D 5 ING Bank Śląski A F1 C 1 Pekao Bank Hipoteczny SA A- F2 1 AA (pol) F1+ (pol) PKO BP 2 Municipalities Białystok BBB BBB A (pol) Bielsko-Biała BBB+ BBB+ AA- (pol) Bydgoszcz BBB BBB A (pol) Częstochowa BBB BBB Gdańsk BBB+ BBB+ Gliwice BBB BBB A (pol) Jarocin BBB + (pol) Katowice A- A- Kielce BBB- BBB- A-(pol) Koszalin BBB-(pol) Łódź BBB+ BBB+ AA- (pol) Myślenice Olsztyn Opole Ostrów Wielkopolski BBB + (pol) Płock BBB+ BBB+ AA-(pol) Rybnik Rzeszów BBB BBB A+ (pol) Szczecin BBB+ BBB+ F2 Warszawa A-(pol) A (pol) AAA (pol) Wrocław BBB+ BBB+ A+ (pol) Zabrze BBB- BBB- A- (pol) Zielona Góra BBB- BBB- A- (pol) Regions Województwo dolnośląskie A- A- AA (pol) Województwo łódzkie A- A- AA- (pol) Województwo małopolskie A- A- AA (pol) Województwo mazowieckie A- A AAA (pol) Województwo wielkopolskie A- A F2 AA+(pol) Revenue bonds Miejskie Przedsiębiorstwo Komunikacyjne Łódź BBB- Miejskie Wodociągi i Kanalizacja w Bydgoszczy BBB- Zakład Komunikacji Miejskiej w Gdańsku BBB A+ (pol) F3 (pol)
Insurance Companies Insurer Financial Strength National Insurer Financial Strength Towarzystwo Ubezpieczeń na Życie EUROPA SA BB Towarzystwo Ubezpieczeń EUROPA SA BB Country Long Term Issuer Default Short Term Issuer Local Currency Long Term Issuer Country Ceiling Rating Default Rating Default Rating Polska A- F2 A AA- Bułgaria BBB- F3 BBB BBB+ Chorwacja BBB- F3 BBB BBB+ Czechy A+ F1 AA- AA+ Estonia A F1 A AAA Litwa BBB F3 BBB+ A Łotwa BB+ B BBB- BBB Macedonia BB+ B BB+ BBB- Serbia BB- B BB- BB- Słowacja A+ F1 A+ AAA Słowenia AA F1+ AA AAA Węgry BBB F3 BBB+ A Outlook POSITIVE NEGATIVE EVOLVING STABLE Watch POSITIVE NEGATIVE EVOLVING Selected press releases and rating actions Q3 2010: 2010-09-17 Fitch: No Immediate Rating Pressure on PGE Due to Energa Acquisition 2010-09-16 Fitch Rates Poland's Upcoming Eurobond Issue 'A-' 2010-09-15 Fitch Places Bank Zachodni WBK on Rating Watch Positive 2010-09-09 Fitch Affirms City of Bielsko-Biala's at 'BBB+'; Outlook Stable 2010-09-09 Fitch: Recovery Remains Challenging for European Oil Refiners 2010-09-06 Fitch Rates Poland's Pekao Bank Hipoteczny SA at 'A-'; Outlook Negative 2010-09-03 Fitch Changes Poland's PKN Rating Outlook to Stable; Affirms IDRs at 'BB+' 2010-09-01 Fitch Changes City of Rzeszow's Outlook to Stable; Affirms 'BBB' 2010-09-01 Fitch Affirms Polish City Of Bialystok at 'BBB'/'A(pol)'; Outlook Stable 2010-08-13 Fitch Affirms Polish City of Opole at 'BBB(pol)'; Outlook Stable 2010-08-10 Fitch Rates Poland's Europejski Fundusz Leasingowy 'A+'; Outlook Stable 2010-08-09 Fitch Affirms Poland's PGE at 'BBB+', Outlook Stable 7
2010-08-04 Fitch Affirms, Withdraws Polish City of Sochaczew's Rating 2010-07-23 Fitch Affirms City of Szczecin at 'BBB+'; Outlook Stable 2010-07-22 Fitch Downgrades Poland's Bank Millennium to 'A-'; Outlook Negative 2010-07-14 Polish Non-Government Debt Market: Q2 2010 Summary 2010-07-13 Fitch Rates Poland's USD1.5bn Bond Issue at 'A-' 2010-07-13 Fitch Downgrades the Polish City of Wroclaw's Rating to 'BBB+' 2010-07-12 Fitch Affirms Poland s City of Rybnik at 'A(pol)'; Outlook Stable 2010-07-09 Fitch Withdraws Polish City of Ruda Slaska's Rating 2010-07-07 Fitch Affirms Municipality of Ostrow Wielkopolski at A-(pol) ; Outlook Stable 2010-07-05 Fitch Affirms MPK-Lodz's Revenue Bond at 'BBB-' 2010-07-05 Fitch: Polish Power Privatisation Gains Momentum 2010-07-02 Fitch Affirms Powszechna Kasa Oszczednosci Bank Polski at Support '2' 2010-07-02 Fitch Affirms Poland s BRE Bank and BRE Leasing at A ; Outlook Stable 2010-07-01 Fitch Assigns ZKM Gdansk's PLN49.440m Revenue Bond Final 'BBB'/'A+(pol)' Ratings 2010-07-01 Fitch Affirms Telekomunikacja Polska at 'BBB+'; Outlook Stable This document has been prepared by employees of Fitch Polska S.A.; address: Królewska Str, No 16, 00-103 Warsaw, Poland. phone: (+48 22) 338-62-80; fax: (+48 22) 338-62-90; e-mail: rating@fitchpolska.com.pl. http://www.fitchpolska.com.pl Fitch Polska S.A. has used due care in the preparation of this document. Our information has been obtained from sources we consider to be reliable but its accuracy or completeness is not guaranteed. Fitch Polska S.A. shall owe no liability whatsoever to any person for any loss or damage caused by or resulting from any error in such information. None of the information in this document may be copied or otherwise reproduced, stored or disseminated in whole or in part in any form or by any means whatsoever by any person without Fitch Polska S.A. prior written consent. Our reports and ratings constitute opinions, not recommendations to buy or to sell. 8