mBank launches covered bond offer for individuals, starting at 4% interest

mBank is introducing a new financial product for individual clients: mortgage covered bonds. The bank aims to simplify the transition from saving to investing with this offering, which features an initial annual interest rate of 4% for the first quarter. Krzysztof Bratos, Vice President of mBank, emphasized the value of "simple, regular, and predictable solutions" over complex products promising spectacular gains.

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When we talk about healthy finances, simple, regular, and predictable solutions are more important than complicated products promising spectacular profits.

Hypothetical covered bonds are debt securities issued by a mortgage bank. While often associated with institutional investors in Poland, mBank is following PKO Bank Polski's lead in offering them to retail customers. These bonds are considered among the safest instruments in the capital market. Piotr Petelewicz, President of mBank Hipoteczny, explained that their repayment is doubly secured: by a portfolio of low-risk residential loans and by the issuer. mBank's covered bonds have received an AA1 rating from Moody's, which is higher than the issuer's own rating.

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We want to make it easier for clients to transition from saving to investing.

The initial issuance of mBank's covered bonds amounts to 500 million Polish złoty, with the potential to increase to 1 billion złoty if demand is high. Subscriptions opened on June 8 and will continue until June 26. Each bond has a nominal value of 1,000 złoty, making the investment accessible to a broader range of clients. After the initial 4% rate, interest will be calculated based on the NBP reference rate plus 0.25 percentage points, with quarterly interest payments.

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The repayment is in a sense doubly secured – both by a portfolio of low-risk residential loans and by the issuer.

The investment period is three years. Investors are not obligated to hold the bonds until maturity, as they will be listed on the stock exchange, enabling earlier sales. To participate, clients need a brokerage account with mBank and must complete a MiFID questionnaire to determine their investor profile. Marek Lusztyn, Vice President of mBank for Risk, described the product as "something between a deposit and more advanced market investments," designed to accustom clients to long-term instruments.

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We want to get clients used to long-term instruments. We are starting with the most predictable and safest product. It's something between a deposit and more advanced market investments.