Poland sold PLN8.07bn (€1.8bn) in zloty-denominated treasury bonds maturing in October 2018, January 2020, and January 2026, with demand at PLN11.9bn, the finance ministry announced on January 28.

The auction’s results add additional evidence of the ongoing recovery in Polish asset pricing since the shock offered by S&P. Poland placed PLN3.35bn of two-year papers amidst demand of PLN4.87bn. The yield of 1.68% was somewhat above the 1.56% achieved at the previous sale of two-year notes in October.

Floating rate five-year bonds sold for nearly PLN2.7bn amidst demand of PLN3.76bn. The 10-year floaters found buyers for PLN2.02bn with demand reaching PLN3.26bn.

The last auction of treasury bonds took place on January 7, before S&P launched a surprise downgrade of the sovereign on January 15. Poland placed PLN4.55bn in treasury bonds maturing in April 2021. Demand reached PLN7.24bn while yields rose to 2.382%.

The results of the auction will likely be viewed as a success for Warsaw. Yields, already elevated by the controversies sparked by the new Law & Justice government, spiked last week following the downgrade. However, despite warnings of similar action from Moody's and Fitch, Polish assets have been slowly recovering since.

As BZWBK pointed out ahead of the auction, however, demand was likely driven by domestic buyers. Polish banks and mutual funds have been the biggest buyers since PiS took office in November, while international media coverage of Poland has been overwhelmingly negative.

Indeed, the zloty has overtaken the ruble as the worst performing currency of the year to date, Bloomberg reported on January 28. That's despite Poland being an oil importer and Russia's heavy dependence on crude exports.