McDonald's issues Hungarian bond

Nation's Restaurant News, Dec 16, 1991

BUDAPEST, Hungary -- McDonald's has become the first to plant the seeds of speculative capitalism in a former Communist nation by issuing Hungary's first private corporate bond since the beginning of World War II.

The bond, worth 400 million forint (in Hungarian currency) or $5.3 million, will be issued at a variable rate of interest by McDonald's Restaurant System of Hungary KFT and is being privately placed with Hungarian institutional investors.

At the same time foreign investors, for the first time since the war, are being allowed by the National Bank of Hungary to acquire the debt in secondary markets. First Boston and Credit Suisse are the lead resellers in the secondary markets.

Interest on the bonds will be paid annually at a variable rate ranging between 29 percent and 25.75 percent, which is below the country's current rate of inflation of 35 percent. The securities mature Oct. 28, 1995. Under Communism, state-owned companies issued bonds in Hungary for several decades. But McDonald's will become the first private offering since the reform movement.