Poland issues 'Panda bond' at negative yield

By bne IntelliNews August 26, 2016

Poland has become the first European sovereign to issue a “Panda bond” – a renminbi bond from a non-Chinese issuer, sold in China.

The Polish ministry of finance announced on August 25 that the issue of RMB3bn (€399mn) in three-year bonds with a coupon of 3.4% had been priced at a negative yield of -0.173% after being swapped into euros. The issue was subscribed twice over.

The move demonstrates the eagerness of Central European countries to build economic ties with China. Like most of its neighbours, Poland is seeking Chinese investment and wants to boost trade to reduce its massive trade deficit with the world's second biggest economy. 

Poland first said in February it was considering issuing debt in yuan. Chinese President Xi Jinping made a visit to Warsaw in June during which a strategic partnership was signed on top of several business deals.

The success of the issue (and the low yield) could potentially open up new sources of financing at a time when Poland’s Law and Justice government wants to boost social spending. Poland is planning to raise its budget deficit next year to just within the European Union's limit of 3% of gross domestic product.

“Emitting bonds on the Chinese market was aimed above all at diversifying our investor base and acquiring financing to cover this year’s loans,” the ministry said.

The issue, for which Bank of China and HSBC were the bookrunners, was taken up mostly by Chinese institutional investors, it said.

Hungary became the first CEE sovereign to issue yuan-denominated debt in April, when it sold CNY1bn (€137mn) of a three-year "Dim Sum bond", a renminbi bond issued outside China. But that bond had a coupon of 6.25% and was priced around 2.5%, well above the 1.5% that forint bonds were trading at the time.

Related Articles

Ukraine central bank slams PwC over PrivatBank audit

The National Bank of Ukraine (NBU) has accused PricewaterhouseCoopers, PrivatBank's auditing firm, of providing an inadequate evaluation of collateral under loans provided by the çountry's ... more

Macedonia to issue Eurobond in 2017 if conditions are "extremely favorable"

Macedonia sees no need to issue a new Eurobond issue in 2017, but this may happen if the circumstances on the international money market are extremely favorable, bne IntelliNews has learned from ... more

Speculation over a second downgrade grows as S&P drops outlook on Polish economy

Speculation that Poland could suffer a second downgrade of its sovereign rating at the end of the week intensified on January 10, as Standard & Poor’s lowered its estimates on economic growth. ... ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss