Moodyʼs assigns Baa2 rating to CPI Hungary Investments and its new senior unsecured bonds


Photo by Daniel J. Macy /

Moodyʼs Investors Service, has today assigned a Baa2 rating to CPI Hungary Investments Kft. and its new HUF 30 billion backed senior unsecured bonds, guaranteed by CPI Property Group. The outlook on CPI Hungary Investments Kft. is negative, according to a press release sent to the Budapest Business Journal.

Photo by Daniel J. Macy/

The tenor of the bonds is 10 years with bullet maturity and an annual coupon of 2.25% in local currency terms.

"We understand that the proceeds from the issue will be general corporate purposes which, according to the company, may include capital expenditures, acquisitions, developments, debt repayment or retention of cash," Moodyʼs says in its ratings rationale.

The proceeds will also be allocated in line with CPI Property Groupʼs Green Bond Framework.

The bonds will rank pari passu with all other existing and future senior unsecured obligations of the Issuer and the Guarantor. The bonds benefit from financial covenants, that limit the groupʼs leverage to 60% and issuance of secured debt to 45%, and set a minimum interest coverage level of 1.9x, in line with the documentation of the guarantorʼs EUR 8 billion Euro Medium Term Note Program.

The holders of the new backed senior unsecured bonds will be subordinated to the existing secured bank debt. As of December 31 last year, 25% of the groupʼs indebtedness was secured by pledges over property in its portfolio.

Moodyʼs says that CPI Property Groupʼs Baa2 long-term issuer rating reflects the companyʼs strong business profile supported by the good quality of its portfolio and its robust geographical and segment diversification. It further considers managementʼs solid operational execution and its commitment to balanced financial policies.

"This, together with an excellent liquidity profile and strong access to debt capital markets, even in uncertain times, will help the company to navigate through the expected less benign operating environment," the ratings agency argues.

Moodyʼs also adds that the negative outlook incorporates the risk that the coronavirus outbreak puts greater pressure on the occupier and investment sentiment in the groupʼs core markets. Against the backdrop of an economic contraction in 2020 and uncertainty around the pace of recovery in 2021, the agency anticipates that the group could face more challenging operating conditions, including weaker rental growth prospects and downside pressure on capital values.

"However, we recognize that the group has financial flexibility to protect its rating, supported by its clear financial policy," the agency concludes.

A "new benchmark for the local market"

"CPIPG is proud of our diverse bond investor base and our ability to access unique sources of long-term financing," said David Greenbaum, CFO of CPI Property Group. "The group is pleased that our participation in the BGS will result in Hungaryʼs first corporate green bond transaction, thus creating an important new benchmark for the local market."

The group is a leading owner of income-generating real estate in Hungary, with a Hungarian portfolio valued at EUR 667 million as of year-end 2019. Its properties include the award-winning Balance Hall office, Hungaryʼs first conscious building, which includes innovative tools to cut energy consumption.

"CPI Hungary has a clear track record of local leadership across ESG and CSR initiatives," said Mátyás Gereben, country manager for CPI Property Group in Hungary. "Issuing green bonds under the BGS reflects our deep commitment to the sustainability and well-being of our properties, partners, and tenants in Hungary."


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