The issue of covered bonds, i.e. special “double-secured” bonds, addressed to individual investors is a novelty on the Polish market. The trail was blazed in the fall of 2025 by PKO BP, whose company PKO Bank Hipoteczny placed securities worth PLN 1.155 billion. This offer was very popular and in April 2026, the largest Polish bank repeated its success, collecting subscriptions for mortgage bonds worth PLN 1 billion on the second day (originally the offer was supposed to last 15 days).
Covered bonds can only be issued by mortgage banks, and five banking groups in Poland have such institutions: PKO BP, Pekao, mBank, ING Bank Śląski and Millennium. They are active on the institutional market, although regulatory changes in the Long-Term Funding Index (WFD) theoretically limit their needs for new issues.
How do mBank's mortgage bonds compare to the competition?
Now mBank Hipoteczny is launching its debut offer for individual investors. Subscriptions start on Monday, June 8 and will last three weeks or until the issue pool is exhausted. It amounts to PLN 500 million, but may be increased to PLN 1 billion. The offer for individual clients will be available at the mBank brokerage office.
The nominal value of one mortgage bond is PLN 1,000 and this is the minimum subscription value. Interest will be paid every three months and the interest rate will change at this frequency. In the first interest period it is 4 percent, and in the following quarters it will be the sum of the NBP reference rate and a margin of 0.25 percentage points. (which currently equals 4%). These are the same conditions as those offered by PKO BP, although in the April issue the largest Polish bank extended the maturity to four years, and currently the securities sold by mBank are three-year-old. You can exit the investment earlier because the bonds will be admitted to trading on Catalyst, which is part of the Warsaw Stock Exchange (mBank will be the animator). It is worth noting that when selling bonds on the stock exchange, the accrued interest is retained proportionally, unlike breaking a bank deposit, so it is a good way to store liquidity profitably with low risk.
Treasury bonds are securities treated as free from credit risk, covered bonds are in the same security class. For people who value peace and quiet they can therefore constitute diversification (in terms of product, structure, maturity) and an alternative to instruments issued by the government. How does mBank's offer compare to State Treasury bonds?
For example, a three-year fixed-rate (TOS) bond has a rate of 4.40 percent. per annum, and two-year variable (DOR) w they offer 4.15% in the first monthly interest period. per annum, and in subsequent years the interest rate is the sum of the NBP rate and a margin of 0.15 percentage points. (i.e. currently it is 3.90%). Although the liquidity of such treasury bonds offered by PKO BP and Pekao is “infinite” (you can subscribe and redeem at any time), the cost of early redemption is relatively high in the case of three-year bonds (1% of each bond), and slightly lower in two-year bonds (0.7%). In turn, four-year inflation-indexed bonds (COI) now yield 4.75 percent in the first annual interest period, and in the next three years the interest rate is equal to CPI inflation increased by 1.25 percentage points.
Another option that few individual investors know about is purchasing treasury bonds on the Catalyst market. This solution offers wide investment opportunities, although it also has its own specifics and disadvantages.
The first step towards further investments
— This is our debut on the individual customer market, but we do not treat it as a test. We rather treat it as the beginning of building a new quality, as a permanent expansion of the product offer and investment offer for customers – says Piotr Petelewicz, president of mBank Hipoteczny.
He adds that the offer is, on the one hand, a response to the needs of customers who increasingly report investment needs on the capital market, and on the other hand, it is an element improving the risk profile of the mBank group's balance sheet. As for the second argument: mortgage bonds improve the term structure of liabilities, extending them and better adapting them to assets. The Polish Financial Supervision Authority is striving for this, because now the vast majority of assets, including mortgages with a term of 20-30 years, are financed in Polish banks by short-term liabilities (i.e. most often deposits of several months and current deposits).
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The bank's representatives suggest that this is just the beginning and, depending on the interest in the issue launched today, a decision will be made on the dates of subsequent issues. — Our ambition is to appear on this market. We would like to appear on the retail market at least once a year. This probably doesn't mean that we won't be present on the institutional market. The frequency of our issues, the amount of the issue, all this will be determined in close cooperation with mBank in the context of the need to provide long-term financing, said Petelewicz.
mBank estimates that the issue should be of interest to the bank's customers. – It is difficult for us to say today how the volume will be distributed between more affluent and retail clients, but our intention is to democratize investing and also democratize mortgage bonds – says Krzysztof Bratos, vice-president of mBank for retail banking.
— There is a need on the market for a solution that will be regular, simple, easily explainable, and one that will enable our clients to move from the deposit side to the investment side, allowing them to take that first step. This is consistent with our philosophy of simplifying finances and making things easy for customers, adds Bratos.
What are mortgage bonds? Here are their specifics
Mortgage covered bonds are debt securities issued by mortgage banks. They are said to be “double secured” in terms of insolvency risk. The point is that the investor (purchaser of the mortgage bond) has claims against the issuer of the bond and against a separate pool of assets (collateral). Thanks to this, the rating of a mortgage bond is sometimes even higher than the rating of the country from which the issuer comes from (in the case of mBank, this issue has an AA1 rating from Moody's).
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However, low risk means lower profitability of such securities. They showed their strength, for example, during the debt crisis of the Southern countries of the euro zone – Greek mortgage bonds did not lose their value, unlike local treasury bonds. These instruments stand out in terms of:
- Type of security – most often a portfolio of receivables from loans for houses and apartments. Mortgage banks create a portfolio of receivables entered in the mortgage bond security register. Investors have priority over property entered in the register (this is very important because, apart from security on the bank's own property, the mortgage is the most important security)
- The value of the security in the register must be higher than the value of the issued covered bonds. The quality of the register is examined by trustees appointed by the Polish Financial Supervision Authority. A rigorous valuation is used based on the banking and mortgage value of the property.
Note: the information contained in the text is for informational purposes only and does not constitute an investment recommendation, information recommending or suggesting an investment strategy within the meaning of applicable regulations, or any other form of advice regarding the purchase or sale of financial products.
Author: Maciej Rudke, journalist of Business Insider Polska
