Poland to cash in on strong demand with dollar bond

13/05/2010 | Sarah White

Poland is gearing up to launch a $1 billion bond issue in the face the threat of further volatility in financial markets, which has forced other central and eastern European sovereign borrowers to hold fire in recent weeks

Poland is gearing up to launch a $1 billion bond issue in the face the threat of further volatility on financial markets, which has forced other central and eastern European sovereign borrowers to hold fire in recent weeks.

In what would be its first venture in the US market this year, Poland hopes to match the success of a $2 billion bond it printed in July last year, after a four-year absence in the currency.

Poland’s debt management office is now weighing up the need to conduct another US roadshow, after an extensive series of investor meetings there last year, Anna Suszynska, deputy head of the public debt department at the Polish ministry of finance, told Emerging Markets.

Poland has also met investors across Asia, leading to expectations that the government is preparing a yen-denominated bond, or Samurai. However Suszynska said that Asian investors were also big buyers of dollar paper and could be drawn into the US deal.

The country has already managed to navigate last quarter’s heightened market turmoil, sparked by sovereign debt concerns in the eurozone, to raise E4.13 billion through two bonds priced in January and March.

Other issuers such as Albania (B1/B+), which embarked on a roadshow for a debut eurobond in late April, have had to put their deals on hold as concerns over a Greek bailout peaked last week.

Altogether, A2/A-/A- rated Poland has secured more than 80% of its E5.5 billion funding target for the year, added Suszynska. She attributed the high demand for Polish paper to investors’ recognition of the country’s positive growth prospects this year.

GDP is expected to reach 2.7% this year, according to a European Commission forecast last week, putting Poland on a par with Slovakia as the fastest growing economy in the European Union. Its budget deficit, however, will reach 7.3% of GDP in 2010, the Commission said, although this is expected to decrease marginally by 2011.

But despite being in the “final stages of preparing documentation” for its fresh bond issue, Poland may yet hold off from issuing immediately. Suszynska said that along with other sovereign debt borrowers in the region, the country was waiting “for a further tightening in spreads and more stabilisation.”

“I think it will be at least two weeks though until we see others [sovereign] issuers coming out, and people will be watching the market very carefully,” she said.

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