WARSAW, Oct 18 (Reuters) - Poland surprised markets by issuing a marketable Eurobond with the longest maturity ever on Monday as it sought to take advantage of ultra-low yields while they last.
Poland opened the books on Monday on a dual-tranche euro offering comprising 12- and 30-year bonds. It is Poland’s first-ever 30-year euro-denominated bond brought to market, although a 30-year and a 50-year were issued through a private placement.
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 12-year debt at 50 basis points over mid-swaps and on the 30-year bond at 120 basis points over mid-swaps, 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 on Monday. “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. And 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.
The Polish bonds are expected to price today via Barclays, BNP Paribas, Citi, Commerzbank and Santander. (Reporting by Marcin Goettig and Pawel Sobczak; Writing by Marcin Goettig; Editing by Larry King)