August 26, 2014 / 1:51 PM / 3 years ago

Poland mulls 2015 pre-funding but puts costs under microscope

LONDON, Aug 26 (IFR) - Poland is strongly considering pre-funding for 2015 in international bond markets this year, but the sovereign is paying particular attention to cost and timing, a ministry of finance spokesperson told IFR.

“Pre-financing borrowing needs for next year is our usual policy,” the spokesperson said by email. “A very favourable situation on the local TS market and international markets [low yields, tight spread]) is of course one, but important, factor encouraging us to do that.”

While the markets are highly tempting, the sovereign, rated A2/A-/A-, could postpone the deal until the beginning of 2015.

“This year we might be very flexible and focused very much on proper timing and cost effectiveness because first redemptions in hard currencies in 2015 are in May,” the ministry of finance spokesperson said.

“We may wait for best market conditions to raise the funds through tapping the foreign markets and be flexible between Q4 2014 and Q1 of 2015,” the spokesperson added.

Poland is already 97% funded for 2014, and plans to take this up to fully funded by drawing down on EIB and World Bank loans from September.

The spokesperson added: “The level of pre-financing and its structure [domestic versus foreign markets] will depend not only on the market situation, but also on the budget performance and on the level of cash reserves in PLN and hard currencies.”

The sovereign has already begun its 2015 local currency pre-financing programme after buying back bonds on the local market totalling PLN5.3bn that were due to mature in January 2015, according to the ministry.

Poland last came to the international market in January this year to print a US$2bn 10 year bond.

Reporting By Michael Turner, editing by Anil Mayre and Sudip Roy

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