Poland carried out a record bond issue in Japan. The Ministry of Finance announces further foreign auctions
On Friday, four tranches of treasury bonds denominated in yen were valued, the Ministry of Finance announced. The yield on three-year bonds was set at 1.88 percent and on 20-year bonds at 3.65 percent.
According to the Ministry of Finance's announcement, the total value of the four tranches of debt securities amounted to 211.6 billion yen (equivalent to PLN 4.82 billion), and the issue price of the bonds is 100%. nominal value.
Poland was last present on the Japanese market at the end of 2024, when it issued treasury bonds worth 97.1 billion yen (approximately USD 626 million). These securities, called samurai, had different maturity dates, falling in 2027, 2029, 2034, 2044 and 2054. Earlier, in the fall of 2023, Poland sold bonds in Japan for 85 billion yen, or PLN 2.3 billion (at the then exchange rate).
The ministry announced on Friday that 3-year bonds with a nominal value of 116.9 billion yen and a maturity date of February 13, 2029, was valued at 50 basis points above the swap rate, which means a yield of 1.88%. 5-year bonds with a nominal value of 62.7 billion yen and a maturity date of February 13, 2031, was valued at 65 basis points above the swap rate, which means a yield of 2.22%.
10-year bonds with a nominal value of 11.8 billion yen and maturity on February 13, 2036 was valued at 95 basis points above the swap rate, which means a yield of 2.9 percent, and 20-year bonds with a nominal value of 20.2 billion yen and a maturity date of February 13, 2046, was valued at 105 basis points above the swap rate, which means a yield of 3.65%.
For comparison, on Friday morning the yield of Polish treasury bonds on the market was:
- 3.50 percent in the case of 2-year-olds
- 4.38 percent in the case of 5-year-olds
- 5.08 percent in the case of 10-year-olds
“This is the largest-ever transaction carried out by the Ministry of Finance on the Japanese yen market and at the same time the largest transaction carried out by a public sector issuer in recent years. The bond was placed among Japanese institutional investors such as regional banks, insurance companies and investment funds, as well as among foreign institutions,” the Ministry of Finance said in a statement on Friday.
The Ministry of Finance is now targeting dollars
The interest rate paid to Japanese investors, where interest rates are much lower than in Poland, is lower than the current market rate, but Poland, as the issuer, bears the cost of hedging the currency. The Ministry of Finance is cautious about currency issuances because excessive reliance on foreign debt would increase the state's sensitivity to external shocks (besides, internal demand – thanks to banks, insurers, investment funds and pension funds as well as households and foreign investors – is large). The debt management strategy assumes that the Ministry of Finance will maintain the share of foreign currencies below 25%.
See also: Polish debt is a scarce commodity. Investors rushed to bonds despite the turmoil
In January, the Ministry of Finance placed debt securities with a nominal value of EUR 3.25 billion, and now – after the success of the Japanese transaction – it is considering another sale of international debt in the first quarter. Karol Czarnecki, head of the public debt department of the Ministry of Finance, told Bloomberg News that the issuance of dollar bonds “cannot be ruled out.”
The government plans to accelerate the sale of foreign currency debt in 2026 to finance record borrowing needs, it could be from EUR 10 to EUR 12 billion. In gross terms, borrowing needs for 2026 were planned in the budget at the level of PLN 690 billion and are higher by over 40%.. on the expected fulfillment of the state budget needs for the previous year. A large part of the securities matures, so the Ministry of Finance will have to convince investors to “roll over” the debt (including individual ones). Net borrowing needs in the Budget Act were estimated at PLN 423 billion.
Czarnecki told Bloomberg that while Friday's yen issuance was primarily aimed at refinancing maturing bonds, it also had a strategic dimension. He added that the sale “contributes to building Poland's position as a reliable and predictable issuer, especially in the context of the strong involvement of Japanese investors” in bonds denominated in both yen and zloty.
