On 16 July 2021 Stavmat Zrt. is scheduled to auction its HUF 5bn senior unsecured green bond (ISIN: HU0000360714) under the Hungarian Central Bank’s Bond Funding for Growth Scheme. The terms of the upcoming bond are already reflected in Scope’s current rating on senior unsecured debt, namely, 10-year tenor ending on 20 July 2031, and 10% of face value being subject to amortisation in 2026, 10% in 2027, 10% in 2028, 10% in 2029, 10% in 2030 and the remaining 50% in 2031. The fixed coupon will be 3% and payable yearly, the issue yield to be determined at the auction. Bond proceeds will be used for capex (HUF 4.3bn) to partially finance new investment in a paving production plant in Dabas, and related working capital needs (HUF 0.7bn).

The green bond status is based on Stavmat’s project connected with climate change mitigation and natural resources conservation. In detail, this project will address: renewable energy (installation of solar panels on plant roof), energy efficiency (use of modern equipment and machinery with lower energy consumption; electrification/automation of processes), and eco-efficiency/circular economy (reuse of water and cement waste in production to ensure zero final waste; use of modern equipment and machinery operating with drilled water to minimise freshwater consumption).

Overall, the rating case for Stavmat’s B+/Stable issuer rating remains unchanged. The bond’s green status does not alter the fact that it is senior unsecured debt. Scope’s ‘above-average’ recovery expectation for senior unsecured debt in a hypothetical default scenario remains unchanged, reflected in the BB- rating assigned on the debt category.

This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.