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Hot on the heels of a €1.25bn issue last week, Slovakia sold €94.2m of floating rate four-year bonds at an auction on November 12, while Poland is reportedly set to reopen a Eurobond first issued last month. The pair appear to be pushing to take advantage of current low borrowing costs to extend front-loading for 2013 needs as speculation mounts that the emerging market bond rally is running out of steam.

The Slovak Debt And Liquidity Management Agency reported the auction saw total bids of €230m for the latest issue. The series is a reopening of a five-year bond first auctioned on November 14 last year, reports the Wall Street Journal. The coupon is indexed to six-month Euribor, and the average price paid was 97.8091. Illustrating just how much Slovakia's pricing has tightened through the year, the previous auction on the issue in May saw average prices at 94.01.

Meanwhile, according to unnamed sources, Poland has mandated Commerzbank, HSBC, ING and Societe Generale to lead manage a tap of its 3.375% July 2024 bond, reports Reuters. The original €1.75bn tranche was priced in October at 143 basis points (bp) over mid-swaps via the same lead managers. Warsaw appears to be accelerating its borrowing in the last few weeks, and since that last euro-denominated issue, returned to the Japanese market for the second time this year on November 2 as it doubled a planned issue to raise JPY66bn (€639m).

Slovakia struck to take advantage of record low borrowing costs by selling €1.25bn of 12-year bonds on November 7, at a yield of 3.49%. Finance Minister Peter Kazimir called it, "the lowest interest on record paid on Slovak long-term maturity."

Following a €1bn issue in January, Slovakia spent the following few months of 2012 avoiding the battered euro, and sought to diversify its investor base by selling debt in a variety of currencies, including the dollar and the Czech crown. That saw it fulfill the €7.72bn of gross borrowing needs targeted for the year.

However, it has sparked back into life this month in a bid to front-load a 2013 borrowing target of €8.34bn, as speculation starts to circle that the emerging markets bond rally could be set to come to a sticky end. Kazimir said last week that he considers front-loading next year's borrowing requirements to be a precautionary measure in case market sentiment deteriorates as it did last winter, and pointed out that Slovakia now has a cash buffer of around €5bn.

Reports are now starting to circulate that the hot money that has helped push Central and Eastern European yields to record lows in recent months is likely to take a step back. Released by the actions of the US Federal Reserve and the European Central Bank to hunt yield, commentators are now claiming that buying in EM bond markets has become indiscriminate, and they predict a correction as inflation begins to rise, pushing the Fed to raise rates.