Bloomberg News

Utilities to Spur Poland’s Corporate Bond Market, Citigroup Says

March 09, 2012

Poland’s corporate bond market is set to expand more than 10 percent this year as power utilities plan “substantial” investments and banks seek new funds, according to Citigroup Inc. (C)

Borrowing costs in Poland “remain substantially lower as compared to the Eurobond market” and companies will “take advantage of this situation and tap the local market in the first place,” Misbah Shah, vice president of the management board of Citigroup’s Bank Handlowy SA in charge of treasury operations, said in an interview in Warsaw on March 7.

The value of zloty-denominated corporate bonds rose 41 percent to a record 39.9 billion zloty ($12.8 billion) last year, according to Fitch Ratings. PKN Orlen SA, Poland’s biggest refiner, sold 1 billion zloty of seven-year bonds priced to yield 6.58 percent in February, less than higher-rated gas group Polskie Gornictwo Naftowe i Gazownictwo SA paid for Eurobonds, according to data compiled by Bloomberg.

Handlowy was the seventh-biggest manager of corporate bond sales in zloty last year, according to Fitch. Nordea Bank Polska SA (NDA) was the leader and was followed by Commerzbank AG (CBK)’s BRE Bank SA (BRE) and UniCredit SpA’s Bank Pekao SA. (PEO)

“Our target market is essentially focused on bigger transactions,” Shah said. “Our primary goal is to facilitate the secondary market and originate paper that would be of interest to our investors.”

Polish utilities need at least 38 billion euros ($50.3 billion) in funds by 2023 to build power plants to meet European emissions standards, government forecasts show. PGE SA, Tauron Polska Energia SA, Enea SA and Energa SA, Poland’s four biggest power producers, may all sell bonds in 2012, the companies said in the last four months.

To contact the reporter on this story: Marta Waldoch in Warsaw at mwaldoch@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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