Poland sold 1.75 billion euros ($2.26 billion) of 12-year bonds today to complete its financing of the 2012 deficit and start meeting next year’s needs while yields are at record lows.
The benchmark notes maturing in July 2024 were priced to yield 3.385 percent, or 143 basis points above the benchmark mid-swap rate and down from an initial guidance of 150, said a person familiar with the offering, who asked not to be identified because they weren’t authorized to speak about the transaction.
Poland decided to sell the bonds to “take advantage” of record low borrowing costs, Piotr Marczak, the head of Finance Ministry’s public debt department, wrote in an e-mailed response to questions today. The country needs more than 4 billion euros in foreign currencies for debt servicing in the first two months of 2013, he said last week.
“Interest rates are relatively low at the moment,” Bart van der Made, who helps manage the equivalent of $14 billion of assets at ING Investment Management, said by phone from the Hague. “They might as well grab the moment when it’s there.”
The sale comes a day after the Czech Republic sold 750 million euros of notes due in 2022 that were priced at 116 basis points above mid-swaps, according to data compiled by Bloomberg. Poland is rated A2 at Moody’s Investors Service, one grade below the Czech Republic.
The yield on Poland’s existing 2023 euro bond increased two basis points, or 0.02 percentage point, to 3.07 percent at 4:32 p.m. in Warsaw. The government sold the euro notes in June at 195 basis points above the mid-swaps.
The country’s decision to speed up borrowing for next year is “insurance” in case the euro region’s debt crisis flares up, Wojciech Kowalczyk, a deputy Finance Minister, told reporters in Warsaw on Sept. 18.
Commerzbank AG, HSBC Holdings Plc, ING Groep NV and Societe Generale AG managed the sale, the ministry said on its website.