A bond subscription may be an ideal solution for companies where the target company does not wish to raise finance from an outside shareholder, but financing from a bank loan is not an optimal solution either.

The purpose of the bonds subscribed by MFB Invest is to provide an appropriate form of financing for the development of domestic companies. In accordance with the general financing requirements set forth in Section 2 of the MFB Law, MFB Invest Zrt. may subscribe for non-convertible dematerialized bonds issued in a private placement within the framework of a subscription procedure. MFB Invest Zrt. carries out the bond transaction in accordance with the principle of placement on market terms, or with market shortfalls by a placement on the so-called GAP market.

• For businesses based in Hungary,
• Primarily for businesses in the SME sector (not start-ups),
• For profitable businesses with a stable operation for at least 2 years,
• The target company has a long-term income generating capacity,
• The company intends to exploit its market-based growth potential through capacity expansion, or product development.

• For investment, development and related expansion,
• Product development,
• Investment-related working capital financing,
• R&D activities,
• Entering into new markets.

In our practice, 5-year issues tend to predominate, although longer maturities are possible given the business plan and business model. The termination of the bond and the repayment structure will be determined on a case-by-case basis in accordance with the business model and business plan of the company, but the repayment of the principal is typically made in an amortizing structure.

The bond is terminated upon payment of the full principal and all interest due. In the case of a bond with a maturity date, the termination of the bond is automatic on the maturity date or by means of a call, redemption, repurchase or transfer, depending on the structuring of the transaction.