Poland Pays Record-Low Yield at Five-Year Debt Auction

Polish yields fell to a record at an auction of five-year notes, spurring more borrowing than planned and bringing the government closer to meeting all of this year’s financing needs.

The Finance Ministry sold 4.41 billion zloty ($1.32 billion) of securities maturing in April 2017, compared with a maximum target of 4 billion zloty, it said in an e-mailed statement today. The notes were priced to yield 4.361 percent, the lowest cost for the government to borrow for five years in zloty, according to the ministry’s website that tracks auction results since 1994.

Polish bonds have rallied this year as the country is poised to expand at the fastest pace in the European Union while pledging to cut the budget deficit below 3 percent of economic output. The government has “in practice” secured 90 percent of this year’s borrowing needs after the sale, Piotr Marczak, the head of Finance Ministry’s public debt department, said in an e-mailed statement today.

“We see that the positive trend in debt markets continues,” Bartlomiej Wit, chief fixed-income trader at ING Bank Slaski SA, said by phone from Warsaw. The auction shows there is “strong interest from buyers,” he said.

Poland will meet all of this year’s borrowing needs by the end of September, Deputy Finance Minister Dominik Radziwill said on TVN CNBC yesterday. The government plans to start raising funds for 2013 budget in the fourth quarter, he told the broadcaster.

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