Poland places two-year bonds despite euro worries

03 Feb, 2005

Poland sold all 2.3 billion zlotys ($740 million) of its 2-year notes on offer at a tender on Wednesday, with demand strong despite warnings from Brussels Warsaw may miss its euro adoption targets. Bond prices fell in morning trade, but the 2-year note inched up after the tender, supported by continuing strong demand for shorter-dated debt driven by expectations of interest rate cuts this year.
"This auction went very well despite the nervousness (over euro entry) in early trade," said Maciej Slomka, head of fixed income at Bank Pekao. "Recent data shows clearly the economy is slowing and generally we're optimists on the interest rate outlook."
Bids at the tender totalled 7.88 billion zlotys, giving an average yield of 6.196 percent and minimum price 878.1 zlotys.
The yield for the OK0407 paper inched down to 6.18 percent soon after the auction results, dealers said, with both foreign and domestic funds seen behind the buying.
Industrial output, retail sales and overall growth data last month all showed Poland's economic recovery slowed at the end of 2004, fuelling market speculation the central bank may cut rates already in the first half of this year.
Dealers said that outweighed investors' concerns over a European Commission report on Wednesday which said the largest EU newcomer may fail to cut its budget defict to levels required to swap the zloty for the euro in 2009.

Read Comments