Demand for Lithuanian Central Credit Union's subordinated bonds once again exceeds supply

Lithuanian Central Credit Union (LCCU), the central credit union uniting Lithuania’s largest credit union network, the LKU Group, has completed the second offering under its €8 million subordinated bond programme. As in the first offering, investor demand significantly exceeded supply: subscription orders exceeded €6 million, while the issue size was up to €4 million. Across both offering stages, total investor demand for the entire €8 million bond programme reached €11.5 million, exceeding the available amount by 44%.

The bonds carry a fixed annual coupon of 8.25% and will be admitted to trading on the First North alternative market operated by NASDAQ. The offering was arranged by Orion Securities. The bonds have a maturity of 9.5 years. Subject to approval from the Bank of Lithuania, LCCU will have the option to redeem the bonds after 4.5 years.

“The results of this bond offering demonstrate investors’ confidence in our strategy. Our objective is to maintain our current annual growth rate of around 20%, which will enable us to double all key business indicators by 2030 and expand our loan portfolio to more than €2 billion. The capital raised in this offering alone will support the future financing of an additional loan portfolio of approximately €50 million,” says Mindaugas Vijūnas, Chairman of the Board and Chief Executive Officer of Lithuanian Central Credit Union, which unites 44 credit unions across Lithuania.

More than half of investors were retail investors

Retail investors accounted for 55% of investors in the second offering, while institutional investors represented 45%. More than 80% of the total investment amount was raised in Lithuania, with 10% coming from Latvia and 7% from Estonia.

“The second offering saw even stronger participation from institutional investors, while retail investors continued to account for the largest share of demand. This reflects confidence in LCCU’s financial performance and capital strengthening strategy, while investors also recognise the resilience and long-term potential of the cooperative banking model. These results confirm that high-quality local issuers continue to attract broad and stable investor demand in the Lithuanian capital market,” says Matas Čipkus, Head of Capital Markets Transactions at Orion Securities.

All subscription orders of up to €10,000 submitted by investors who are members of LKU Group credit unions were allocated in full. Allocations for larger investors were reduced on a pro rata basis to reflect the overall oversubscription, in accordance with the terms set out in the bond offering document. This allocation approach is intended to establish a diversified investor base, balanced between retail and institutional investors.

Record growth supported by conservative risk management

The LKU Group has delivered some of the strongest financial results in its history this year. The Group’s deposit portfolio exceeds €1.1 billion, while capital increased by more than 17% year-on-year to €105 million. Total assets amounted to €1.27 billion at the end of the first quarter of the year.

More than 80% of the Group’s loan portfolio is classified as low risk. The largest individual borrower accounts for less than 1% of the total loan portfolio, while the portfolio remains well diversified across different sectors of the economy.

LCCU is supervised by the Bank of Lithuania and is subject to capital and liquidity requirements equivalent to those applied to commercial banks. According to the latest available data, LCCU’s capital adequacy ratio stands at 19.47%, compared with a minimum regulatory requirement of 13.92%.

LCCU also cooperates with international financial institutions in its lending activities. It has secured €3.5 million in financing from the Council of Europe Development Bank. In addition, it has strengthened its capital base through €5.5 million in subordinated loans provided by the European Investment Fund (EIF).

Subordinated bonds qualify as Tier 2 capital under the applicable regulatory framework. In the event of insolvency or liquidation, holders of subordinated bonds rank behind other creditors in the order of repayment.