14.7.3. Bonds

• by currency (translated into PLN)

• by interest rate

The difference between the nominal value and carrying amount of bonds results from measurement of bonds at amortized cost using the effective interest method.

In case of corporate bonds C and D series, the margin level and fixed interest rate depends on assessment (rating) of ESG agency, which measures the PKN ORLEN’s resilience to material risk related in particular to the PKN ORLEN’s fulfilment of the principles of responsibility and care for environment, social responsibility and implemented corporate governance as well as how the PKN ORLEN manages those risks, or alternative ESG rating:

• corporate bonds C series – the margin for the first interest period amounts to 90 bp per annum and in the next interest periods it is possible to add to the margin 0,05% or 0,1% per annum respectively, depending on the level of ESG rating admitted according to the bond issue terms and conditions,
• corporate bonds D series – the interest rate for the first interest period amounts to 2,875% per annum and in the next interest  periods will stay at the same level or it is possible to change it by 0,1% or 0,2% per annum respectively, depending on the level of ESG rating admitted according to the bond issue terms and conditions.

The ESG rating is assigned by independent agencies and assesses a company’s or industry’s ability to sustainable and balanced grow by taking into account three main, non-financial factors, such as: environmental issues, social issues and corporate governance. In terms of environmental issues, product emissions and carbon footprint, environmental pollution, as well as the use of natural resources and usage of green technologies are crucial.

Green bonds

In the 1^st half of 2021 PKN ORLEN established the medium term Eurobonds programme (“EMTN Programme”), which enables the PKN ORLEN to issue the Eurobonds. Based on the EMTN Programme the PKN ORLEN will be able from time to time to issue Eurobonds, in many tranches and currencies, with various interest structures and due dates. Within the EMTN Programme the total nominal value of the issued and outstanding Eurobonds, in no time, will not exceed the amount of EUR 5 billion or the equivalent of that amount in other currencies. Funds from the issuance of the Eurobonds will be used by the PKN ORLEN in accordance with the published green/sustainable finance framework (the „Green Finance Framework”). On 27 May 2021, the first Eurobonds issue was completed. Series A with a total nominal value of EUR 500 million was issued for a period of 7 years.

Under Green Finance Framework, 3 groups of investment projects implemented in ORLEN Group were identified, which will be financed and refinanced under the „green” Series A Eurobonds issue:

Renewable Energy Sources including:

• offshore and onshore wind farms;
• photovoltaic farms

Clean Transport including:

• electric car chargers;
• hydrogen car charging infrastructure

Anti-pollution prevention including:

• waste processing and segregation projects (recycling)

and Key Performance Indicators (KPI) were defined for these projects in terms of their advance of implementation and their impact on the environment. Implementation of these indicators will be subject to cyclical (at least once a year) verification by the by an external consultant and public reporting by PKN ORLEN until the redemption of „green” bonds.