Poland sold euro-denominated bonds today as European countries from Ireland to Slovakia take advantage of lower yields before the U.S. Federal Reserve makes more cuts to monetary stimulus.
Poland priced 2 billion euros ($2.7 billion) of January 2024 bonds to yield 3.032 percent, or 87 basis points above midswaps, a person familiar with the plan said, asking not to be identified because the details are private. The sale comes a day after the yield on Poland’s existing euro-denominated notes due in July 2024 dropped to a one-month low of 2.89 percent.
Nations are being drawn by lower yields before the Fed further reduces its $85 billion monthly quantitative-easing program after deciding to trim it by $10 billion at a meeting last month. Ireland sold 3.75 billion euros of 10-year bonds yesterday to yield 3.543 percent, while Slovakia is selling 15-year euro securities at around 115 basis points above midswaps, according to a person familiar with the plan.
“Issuing longer-term bonds is good for Poland to lock in low interest rates,” Lutz Roehmeyer, who manages $1 billion at Berlin-based Landesbank Berlin Investment, said by e-mail today. “Sovereigns want to get done with state budget financing as quick as possible in this favorable environment.”
Roehmeyer, who isn’t buying Poland’s bonds, said the debt is “fairly priced.”
Poland last raised 700 million euros through the sale of 2019 notes in October at 43 basis points above mid-swaps. The yield on its July 2024 debt has fallen 45 basis points since reaching a three-month high on Sept. 12 to 2.97 percent at 6:40 p.m. in Warsaw, according to data compiled by Bloomberg.
“I’m looking at this bond,” Peter Schottmueller, who helps manage the equivalent of $17 billion in emerging-market and international debt at Deka Investment GmbH in Frankfurt, said by e-mail today. “The issue is attractive.”
The yield on Slovakia’s 2021 Eurobond advanced 10 basis points, or 0.1 percentage point, to 1.92 percent today from a two-week low yesterday. Natixis, Slovenska Sporitelna AS and UniCredit SpA are the lead arrangers of the new bond issue.
The Federal Open Market Committee will probably cut bond purchases in $10 billion increments over the next seven meetings before ending them in December, according to a Bloomberg News survey of economists. It next meets Jan. 28-29.
BNP Paribas SA, Citigroup Inc., Societe Generale SA and UniCredit SpA are managing Poland’s Eurobond sale, the Finance Ministry said on its website today.
Poland plans to cover as much as 60 percent of its 2014 funding requirements by the end of the first quarter. The country, which needs to borrow 132 billion zloty ($43 billion) in 2014, may sell debt denominated in euros and dollars before the end of March, the Finance Ministry said on Dec. 30.
It’s “clever for Poland to come now and front-load financing in the current strong market,” Michael Ganske, head of emerging markets at Rogge Global Partners Plc in London, said by e-mail today.