3 Min Read
(Updates with issue size, pricing)
By Marcin Goettig and Pawel Sobczak
WARSAW, Oct 18 (Reuters) - Poland surprised markets on Tuesday by issuing its longest-dated marketable eurobond, part of a dual-tranche 1.25-billion-euro ($1.4 billion) offering, as it sought to take advantage of ultra-low yields while they last.
Three-fifths of the offer was made up of 12-year and the rest of 30-year bonds.. It is the first time Poland has brought a 30-year euro-denominated bond to market, although it has made private placements with maturities of 30 and 50 years.
The decision took markets by surprise, because Poland usually issues Eurobonds at the start of the year. The deputy finance minister for debt said in September that no more issues were planned for this year unless there was a "perfect, short-lasting" opportunity.
Poland set the final guidance on 750 million euros worth of 12-year debt at 50 basis points over mid-swaps, and at 120 basis points over mid-swaps on the 500 million euros of 30-year debt, according to a lead. The combined order books were over 1.75 billion euros.
The European Central Bank had driven yields in the bloc to unprecedented lows with its programme of asset purchases, but earlier in October yields jumped on concern the scale of purchases might be reduced.
"I can definitely see the logic of trying to utilise the current very conducive market conditions, the hunt for yield and very low yields in the euro zone," said Jakob Christensen, head of emerging market research at Copenhagen-based Danske Bank.
A tapering-off of ECB asset purchases would probably lead to higher euro zone yields, increasing the cost of financing for countries like Poland.
"We want to take advantage of the good climate on the market, pre-finance next year's borrowing needs," Deputy Finance Minister Piotr Nowak said. "We want to avoid potential uncertainty related to the development of the situation in the United States," he said, without elaborating.
The United States holds a presidential election on Nov. 8, and the Federal Reserve is expected to raise U.S. interest rates by the end of the year, a decision that could translate into higher yields on the U.S. market.
Poland's 30-year bond follows Italy's first 50-year bond, issued in October. Earlier this year France, Belgium and Spain all issued 50-year bonds. In March, Ireland issued a 100-year bond that almost certainly none of the investors who bought it will live to see redeemed. ($1 = 0.9105 euros) (Reporting by Marcin Goettig and Pawel Sobczak; Writing by Marcin Goettig; Editing by Mark Trevelyan)