Municipal bonds quotations

The bonds have the status of subordinated bonds / The issuer of the bonds has requested approval for the liabilities under the bonds to be included in the issuer’s supplementary capital in accordance with Article 127 of the Act of 29 August 1997 – Banking Law, as a result of which the bonds may be granted the status of subordinated bonds.

According to Article 22 of the Act of 15 January 2015 on Bonds, the issuer may decide in the terms of issue that where the bonds are unsecured, debt arising from the bonds issued by the Issuer will be satisfied in the event of bankruptcy or liquidation after the satisfaction of the issuer’s all other debt due to its creditors.

Furthermore, in accordance with the Act of 10 June 2016 on the Bank Guarantee Fund, the Deposit Guarantee Scheme, and Recovery, bank recovery and the cancellation or conversion of subordinated bonds may apply under certain circumstances. Under such circumstances, the payment of liabilities under such bonds may be temporarily limited, the bonds may be converted into shares or even cancelled.

Furthermore, in accordance with the communication from the Polish Financial Supervision Authority (KNF) dated 24 October 2017, in the opinion of KNF, it is reasonable for retail investors to limit their exposure to financial instruments of such type, both in primary and in secondary trading. Such actions applicable to subordinated bonds could hinder or prevent trading in bonds on the secondary market.

In the context of the foregoing, the Warsaw Stock Exchange points out that the foregoing circumstances could significantly impact the risks of investing in bonds which have the status of subordinated bonds.