(Bloomberg) — Poland’s state development fund PFR SA plans to become an anchor investor in green bond sales to further fan demand for such debt as the country faces a mammoth task of transforming its coal-reliant economy.
PFR seeks to spend the bulk of its annual investments, estimated at as much as 3 billion zloty ($731 million), on energy projects including offshore wind farms, power storage systems and gas-fired plants, Deputy Chief Executive Officer Mikolaj Raczynski said in an interview. Issuance of green bonds by Polish corporates surged to a record $3.2 billion equivalent this year, data compiled by Bloomberg show.
Raczynski said Polish mutual funds have strict concentration limits, hampering their ability to buy larger chunks of green bond issues by the country’s corporations. The participation of PFR in such sales should allow the local investors to bid for more and boost issuances via the “multiplier effect,” he said.
Poland faces huge investments to reduce its dependence on burning coal, whose carbon emissions make its electricity among the most expensive in the European Union. Besides wind and solar, the country is also planning to build its first nuclear power facility with the help of US companies.
PFR may potentially take part in the nascent nuclear project, with the final decision hinging on the financing model picked by the government, according to Raczynski. In turn, the fund will be phasing out its engagement in photo-voltaic energy farms, given already high saturation of such projects.
PFR’s new management, appointed after a change of government late last year, will present its new strategy next month. In past years, the previous administration used the fund to secure financing for pandemic relief, stabilize the zloty as well as boost the state’s role in the economy.
“We understand that in previous term PFR was helping the government with different tasks, including restructuring of troubled companies, supporting state institutions with technology or helping with strategic acquisitions in the banking industry,” Raczynski said. “Now, it’s the time to refocus on our main mandate as a development institution.”
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