Analysis
Deloitte Bond Index
Data on the Bond Market in the Czech Republic
The Bond Index shows the developments on the CZK corporate bond market since 2017. Its aim is to inform the general professional public about the size and structure of the Czech bond market.
Bond Index 2021 | 1Q
According to records of publicly available information, companies in the Czech Republic issued corporate bonds in the total amount of CZK 30,6 billion in the first quarter of 2021. The volume in this period was thus the same as for the entire year 2020. The volume of new issuance was driven mainly by large above-threshold issues.
Deloitte Bond Index Q1 2021
“Data included in the Bond Index show that below-threshold issues in the first quarter of 2021 offered on average a 3.3 pp higher coupon yield compared to the above-threshold ones (7.8% p.a. v. 4.5% p.a.). The trend of recent years of converging yields of below-threshold and above-threshold issues reversed in the first quarter.”
Roman Lux, Director of Financial Advisory at Deloitte
Main conclusions
- In the first quarter of 2021, corporate bonds denominated in Czech Koruna were issued in the total amount of CZK 30,6 billion, of which CZK 30,3 billion were above-threshold issues and CZK 250 million were below-threshold issues. The amount of above-threshold issues was exceptionally high in the first quarter of 2021 and the number of issues was also above average.
- The volume of bonds issued in the first quarter of 2021 was mainly affected by the issuance of two tranches of NET4GAS, s.r.o., in the aggregate amount of CZK 11 billion, which showed the potential depth of the CZK bond market. With its issues, NET4GAS, s.r.o. has achieved several interesting milestones, including the aforementioned size of the issue and the long maturities of 7 and 10 years, which are unprecedented on the Czech corporate bond market. The average historical maturity on the Czech bond market is less than 4 years. The second major issuer in the first quarter of 2021 was Česká zbrojovka Group SE with an issue of CZK 5 billion, which was used, among other things, to finance the acquisition of the US company Colt.
- For below-threshold issues, the first quarter of 2021 was average or slightly below average, which is partly attributable to legislative changes, such as the obligation to register all bond issues with the Central Securities Depository. Additional changes to legislation regarding bond issues are expected in the remainder of 2021.
"Two issues of NET4GAS, s.r.o., in the aggregate amount of CZK 11 billion have shown that the Czech bond market can accommodate much larger issues than historical data would suggest. Thus, we can probably observe an excess of demand for bonds from investors over the supply of bonds from issuers on the Czech bond market."
Roman Lux, Director of Financial Advisory at Deloitte
Deloitte Bond Index 2020
In 2020, companies in the Czech Republic issued bonds in the aggregate amount of CZK 31 billion. Year-on-year, the volume of new issues decreased by 26%, mainly due to a lower volume of new bonds on the Prague Stock Exchange. However, the total number of new issues increased by 10% to 200 issues. This confirmed the trend of recent years, i.e. the growing interest of smaller companies in this type of financing. This is reflected in a reduced average issue size. Would you like to know how the CZK corporate bond market developed last year? Check out the Bond Index 2020.
Bond Index 2020
