Alfa Group has decided to cancel the Hungarian NKP bond auction in the first quarter due to rising interest rates

Ha11er green houses in Hungary by Alfa Group

Ohad Epschtein, President of Alfa Group International

Alfa Group is ready to reopen green bond issuance in the future if the market environment improves

BUDAPEST, HUNGARY, April 4, 2022 /EINPresswire.com/ — Alfa Group is committed to being climate conscious. Thus, the company has drawn up guidelines for real estate investments to be respectful of the environment: use of renewable energies and energy-saving solutions in office buildings, warehouses, logistics centers and residential buildings in the group built recently.

Alfa Group initiated the process of issuing a green bond, developing a green bond framework, which received positive feedback from auditors. The green bond is an investment in the future for the company, ensuring that only investments with a positive impact on the environment or the climate will be financed. Alfa Group wants to offer investors the opportunity to join in this positive change and protect our planet.

Alfa Group’s green bond issuance process was initiated in 2020, but bond servicing costs have become higher than expected due to the recent increase in the base interest rate by the National Bank of Hungary . Compared to the start of the process, the coupon to be offered to investors has been doubled. Moreover, the amortization required has seriously reduced the attractiveness of this source of financing, from the point of view of the risk profile offered.

Given the higher uncertainty in the market, the company has internally agreed to adopt a more cautious stance to focus on completing prepared pipeline projects.

According to the initial business plan for 2022, Alfa Group’s “2913 uptown” project on Kassák Street in the 13th district is completed, all units are sold and must be handed over to customers. The 1st phase of the new residential development of Haller Street, in the 9th district is under construction, financed by Bank Intesa. The Group managed to increase the percentage of apartments sold to 45% with prices above budget. The 2nd and 3rd phases of this development are expected to form part of the AEH consolidation, and Alfa Group intends to proceed with the construction of both projects.

As Alfa Group worked on its ongoing developments, received new offers and closed negotiations on bank financing, offered in the project finance structure for financing the development pipeline, by local and international banks, with commercial parameters best possible to be achieved by issuing bonds.

Since the main reason for issuing the bonds was the need for a development finance pipeline, another source of finance with attractive commercial terms was considered preferable. The Group has decided to cancel the Hungarian NKP bond auction in the first quarter due to rising interest rates.

The Alfa Group is still committed to building a better future for our children and continues to work on its green initiative with the previously founded methodology, audited by KPMG. Among the group’s residential programs, one in the 13th arrondissement has been completed and delivered to buyers, while the first phase of the development of more than 600 apartments in the 9th arrondissement is underway. Both developments use renewable geothermal energy and many innovative solutions to realize the company’s aspiration to be climate aware.

Alfa Group is ready to reopen green bond issuance in the future if the market environment improves

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