OREANDA-NEWS. Fitch Ratings has assigned Bank Gospodarstwa Krajowego's (BGK; A-/Stable) state-guaranteed senior notes due 2026 a final Long-term foreign currency rating of 'A-'.

The final rating is in line with the expected rating which Fitch assigned to the notes on 26 April 2016 (see 'Fitch Rates Bank Gospodarstwa Krajowego's Upcoming Issue 'A-(EXP)'').

The notes (ISIN: XS1403619411) are issued under BGK's EMTN programme. They notes are fixed-rate with 1.75% coupon and will mature on 6 May 2026.

KEY RATING DRIVERS
The notes' rating is in line with the Republic of Poland's 'A-' Long-term foreign-currency Issuer Default Rating (IDR). This reflects the unconditional and irrevocable state guarantee for the issue, which covers payments of both principal and accrued interest up to the total amount of EUR700m, and Fitch's expectation that the sovereign will honour the guarantee provided to noteholders fully and in a timely manner. The state guarantee ranks pari passu with Poland's other unsecured senior obligations.

The bonds were issued under an EMTN programme of up to EUR1bn, which allows for the issuance of various types of notes. Each series of notes issued under the programme is subject to a separate guarantee, and each guarantee will need to be approved by the State Treasury of the Republic of Poland on an issue by issue basis.

Proceeds from the issue will be used to finance the National Road Fund. The Fund is not incorporated as a legal entity, and its assets and liabilities are booked off-balance sheet by BGK.

BGK is the issuer of the notes under the programme and, according to the issue documentation, the notes "constitute direct, general and unconditional obligations of the issuer". However, the documentation also states that "any payments under debt securities issued by BGK to finance the National Road Fund (including any notes to be issued under the programme) may only be made from the National Road Fund's funds and not from other funds or assets held by BGK". In Fitch's view, this gives rise to some ambiguity as to the extent of recourse to BGK under the notes. However, this does not affect the notes' rating, given that it is driven by the state guarantee.

RATING SENSITIVITIES
The notes' Long-term rating is sensitive to changes in Poland's Long-term foreign currency IDR. Changes to Poland's Long-term foreign currency IDR would be reflected by the note's Long-term rating.