BlackRock Says Polish Bonds Attractive on Growth-Austerity Mix

Polish bonds are attractive because of the government’s “prudent” policy of balancing economic growth and budget cuts, according to BlackRock Inc. (BLK)’s fund manager Beata Harasim.

“Polish bonds look attractive in the current environment,” said Harasim, who helps oversee 27 billion euros in European fixed-income assets for the world’s largest asset manager. “Fundamentals are still supportive with the risk of recession being very low, the central bank is cutting interest rates and fiscal policy is prudent.”

While the rally has sent yields to record lows, further gains won’t be “as spectacular as we have seen so far this year,” said Harasim. The zloty is “very close to being fairly valued” after 7.5 percent appreciation against the euro in 2012, she said.

Polish bonds have lured foreign investors as the European Union’s largest eastern economy dodged recession amid the debt crisis while the government reduces the budget deficit. The yield on 10-year zloty notes tumbled 1.66 percentage point this year, on course for biggest gain in a decade, data compiled by Bloomberg show.

“Poland’s ability to balance growth and fiscal discipline is a very strong point supporting the local bond market,” Harasim said. The country’s debt “will obviously not remain immune if the low yield environment were to change or if flows to emerging markets turned around,” she said.

To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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