Poland plans to sell $1 billion of bonds as soon as next month, returning to the dollar debt market for the first time in almost a year after delaying plans to issue the securities amid Europe’s fiscal crisis.
“We will be ready in June,” Deputy Finance Minister Dominik Radziwill said in a telephone interview from Warsaw today. “Whether it will indeed happen in June or later is hard to say. We’ll be watching the situation on the markets.”
Emerging-market borrowers from South African rail and port operator Transnet Ltd. to Brazil’s Banco Cruzeiro do Sul SA have held off selling dollar bonds as yields jumped on concern European government indebtedness risked stalling the economic recovery. Europe’s near $1 trillion rescue package spurred a drop in developing nation yields this week to 2.8 percentage points over U.S. Treasuries from 3.3 percentage points on May 6, according to JPMorgan Chase & Co.’s EMBI+ Index.
The yield on Poland’s dollar bond maturing in October 2015 was little changed today at 3.88 percent and is down from 4.29 percent on May 7, the highest in almost three months, according to Bloomberg data.
“There is a chance for emerging-market bond spreads to narrow further in the medium term,” Radziwill said.
Poland has raised 4.25 billion euros ($5.34 billion) from the sale of seven- and 15-year bonds in the first quarter of the year, taking advantage of the lowest emerging-market borrowing costs on record, to help finance the budget deficit. It also issued 475 million Swiss francs ($426 million) of bonds maturing in 2014.
The five-year dollar bonds, which Poland had intended to issue as early as last month, will be the first in the U.S. currency since July.
Poland has filed all “necessary documents” to register the issue with the U.S. Securities and Exchange Commission, Radziwill said.
The government ramped up debt sales at the start of the year as investors were drawn to the European Union’s only economy to avoid recession through the credit crisis. The government covered 47 percent of this year’s borrowing needs through the end of April, Piotr Marczak, head of the Finance Ministry’s public debt department, said last month.
Poland’s debt is rated A-, the seventh-highest investment- grade ranking, with a stable outlook, at Standard & Poor’s.