- Eurobonds priced at 48 basis points more than midswaps
- First emerging-market sale of bonds in euros since July 30
Poland sold the first euro-denominated bond by an emerging-market nation in five weeks, offering 10-year notes to boost its foreign-currency cache before the Federal Reserve raises interest rates.
Eastern Europe’s biggest issuer of debt raised 1 billion euros ($1.1 billion) in bonds maturing on Sept. 9, 2025, to yield of 1.592 percent, according to a person familiar with the plans who asked not to be identified because the information is private. That marks the first euro-denominated deal since Slovenia raised 300 million euros on July 30.
Emerging-market issuers are returning to international debt markets after concern over the slowdown in China roiled financial markets in August. Gazprom PJSC, the world’s biggest natural gas supplier, picked banks for a possible 1 billion-euro placement in October, its first international issue since November, according to a person familiar with the plans. Romania may tap markets for the first time this year as early as this month, also for a 1 billion-euro deal, Deputy Finance Minister Enache Jiru said on Wednesday.
“After the summer break you have to belong to the first issuers to absorb liquidity from investors that did not buy much over the last three months,” Lutz Roehmeyer, who oversees 1 billion euros in emerging-market debt as director of fund management at Landesbank Berlin Investment in Berlin, said by e-mail. “There is a risk that liquidity runs dry when there is an issuer overhang and yields rise as the Fed’s first hikes materialize.”
Forty-eight percent of 54 economists surveyed Aug. 27-31 by Bloomberg News see a September increase in the benchmark lending rate, the first move up since 2006. New York Fed President William C. Dudley said Aug. 26 the global market volatility weakened the September liftoff case.
The note, sold at 48 basis points over midswaps, marks Poland’s second foray into the euro-denominated bond market this year after the country sold 1 billion euros of 12-year notes in March, priced at 35 basis points above mid-swaps. Poland wants to increase its reserve of foreign currencies to safeguard against any potential market turbulence, Piotr Marczak, head of the Finance Ministry’s public debt department, said in an e-mailed statement on Tuesday.
The nation’s Eurobond due May 2027 fell for an eighth day, lifting the yield five basis points to 1.76 percent at 5 p.m. in Warsaw, the highest since July. The rate rose to a record of 2.26 percent in June. Poland’s dollar bonds returned 1.3 percent last quarter, the seventh-best performance among emerging-market indexes compiled by Bloomberg.
BNP Paribas SA, Deutsche Bank AG, HSBC Holdings Plc and JPMorgan Chase & Co. managed the sale, the person said.