Poland’s P4 Plans Debut Bond as Euro Junk Yields Fall to Record

P4 Sp. z o.o., Poland’s fourth-largest mobile-phone operator, is meeting investors to sell a total 870 million euros ($1.2 billion) of bonds after borrowing costs for high-yield issuers fell to a record.

The owner of the Play brand is marketing the notes in euros and Polish zloty to refinance existing debt and pay shareholders, according to a person familiar with the plan. The average yield investors demand to hold junk bonds in euros dropped 18 basis points this month to 4.8 percent, Bank of America Merrill Lynch index data show.

P4, which serves 10 million subscribers, is taking advantage of record low borrowing costs as it upgrades its network to offer fast wireless data connections. The Polish economy is forecast to grow 2.8 percent this year, according to a survey of economists published last week.

“Eastern Europe is growing again,” said Warren Hyland, an emerging-market portfolio manager at Muzinich & Co. Ltd. in London, which manages about $27 billion in credit. “There’s certainly a lot more growth dynamic in Poland than in somewhere like Spain. There might also be a first-time issuer premium in this deal.”

Warsaw-based P4 will be the third Polish company to sell bonds in euros this year, adding to issuance of 650 million euros compared with 1.2 billion euros for all of 2013, according to data compiled by Bloomberg.

P4 plans to issue five-year senior secured notes that it can buy back after two years, 5 1/2-year senior unsecured securities callable after 2 1/2 years, and five-year floating-rate notes in zloty redeemable after one year, according to the person familiar with the deal. The bonds will be issued by P4’s Play Finance SA unit.

Greek Borrower

The company has been assigned a preliminary B+ rating by Fitch Ratings, four levels below investment grade. The average yield on bonds rated single B dropped 26 basis points this month to an all-time low of 6 percent, Bank of America Merrill Lynch data show.

Another high-yield borrower planning bonds in euros is Yioula Glassworks SA. The Greek glass manufacturer has hired Citigroup Global Markets Ltd. to arrange meetings with investors, according to a person familiar with the plan. It would be the first bond sale for the Athens-based company since November 2005, data compiled by Bloomberg show.

Yioula is rated Caa3 by Moody’s Investors Service, nine levels below investment grade, and one step lower at CC by Standard & Poor’s.

The yield on Yioula’s 9 percent bonds maturing in December 2015 fell 523 basis points this month to 11.8 percent, the lowest since June 2008, Bloomberg data show.

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