19/09/2012 08:14:00

Poland Aims To Finance 20% of 2013 Borrowing Needs This Year

By Patryk Wasilewski

WARSAW--Poland aims to finance about 20%, or 29 billion zlotys ($9.2 billion), of its next year's borrowing needs by the end of this year as it will have to draw heavily on its foreign exchange reserves in January and February to redeem maturing bond issues, a Polish deputy finance minister told reporters.

Wojciech Kowalczyk, who has managed Poland's debt issuance since August, added that the ministry has taken advantage of the positive sentiment in the Polish debt market and as a result will finish raising funds for this year in October, having already completed 95% of its plan.

"We would like to top the previous year's result, when we financed 18% of our needs [in the preceding year]," Mr. Kowalczyk told reporters. "If the market situation and demand remain stable we would like this year to finance 20%."

Mr. Kowalczyk added the government will use around 65% of its entire annual foreign-exchange spending in first two months of 2013.

Polish bonds rallied this year as the debt offered investors reasonable yields and moderate risk, while expected monetary easing by the country's central bank further increased their appeal.

Although Poland's economy is showing signs of a significant slowdown this year, with growth down to 2.4% in the second quarter, the government still expects this year's general government deficit to narrow to 3.5% of gross domestic product from 5.1% in 2012. Mr. Kowalczyk said the gap in 2013 could "approach 3%."

Earlier in September, the ministry began financing its PLN145 billion borrowing needs planned for 2013 and sold $2 billion in 10-year dollar-denominated paper in the U.S.

Further foreign-currency-denominated issues are possible later this year, Mr. Kowalczyk added, with the ministry considering the Japanese market. He said the country may issue a larger, euro or dollar-denominated benchmark bond in January or February, but overall foreign bond issues won't exceed 30% of Poland's total issuance plan.

Poland also wants to tap cash from other sources, this and next year, mainly from the World Bank and the European Investment Bank and it hopes to extend its $30 billion flexible credit line from the International Monetary Fund, Mr. Kowalczyk said.

The ministry is currently in talks with the World Bank about another EUR750 million tranche of credit, he added.

Write to Patryk Wasilewski at patryk.wasilewski@dowjones.com

(END) Dow Jones Newswires

September 19, 2012 03:14 ET (07:14 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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