Hungarian central bank scandal brings together bonds from Polish developer GTC

(Bloomberg) – Bonds of Polish real estate developer Globe Trading Centre SA fell due to concerns about the potential impact of the crisis that swept the Hungarian Central Bank Foundation.

Optima Befektetesi Zrt that manages foundation assets. Holds 62.6% of GTC’s shares. A state auditor in Budapest said last week that the foundation was on the verge of bankruptcy, triggering a police investigation into potential misconduct.

The yield on GTC’s euro-timed bonds will be higher than 8.4% a week ago in the morning meeting in Warsaw in June 2026, according to data compiled by Bloomberg. The developer’s Warsaw-listed stock has fallen more than 7% over the past three sessions.

Cezary Bernatek, an analyst at ERSTE Group Bank AG, said Optima’s difficulty makes GTC’s ability to roll smoothly is worrying. Currently, developers are “a good way to continue refinancing”, he said.

“Nevertheless, the current troubles about Optima may be seen as a debt investor, especially concerning,” Bernatke said, adding that if the situation worsens, GTC could face higher refinancing costs.

GTC said in a statement late Friday that Optima’s situation has no “direct” impact on operations and its financial situation remains strong. The Warsaw-based company delayed the release of its 2024 annual report a day ago, seeking more time to merge its recently purchased German real estate portfolio.

According to the Hungarian State Audit Office, GTC stock has fallen since its purchase of developers in 2020, with shares worth less than half of the original average purchase price of 9 Zloty, representing unreasonable premiums.

In addition to the losses of GTC shares, the foundation also made losses in investments in Swiss luxury hut operator Ultima Capital SA as of the end of 2024.

In 2023, a plan to get GTC to buy Ultima abandoned after investors expressed concern. Both investments are in the hands of the Central Bank Foundation, which needs capital to make ends meet, citing the internal Optima report in February 2024, the auditor said.

“The current situation can only be resolved by raising external funds immediately,” the auditor said. According to the memorandum, Optima’s assets are mainly composed of Ultima and GTC stocks, “can only be sold on the stock exchange with high losses and small pieces.”

Central Bank’s new governor Mihaly Varga, who took over this month, said he would improve financial discipline by “reviewing and rationalizing spending.” In one of the first steps as governor, Varga replaced Optima’s administration.

The central bank said it had no comments other than these earlier statements.

Bloomberg also contacted Optima for comment. According to a January letter from the board chairman, the foundation refused to assess that it was on the verge of bankruptcy.

Fitch lowered GTC’s credit score to BB in 2023, the highest non-investment rating, reducing its rating prospects to negative in November last year, citing a risky German portfolio.

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