Poland’s development bank BGK cancelled its bond auction that was due on Monday after yields rose sharply, pushing up the cost of debt for the state. The procs were to be allocate among other things, to the Armed Forces Support Fund at a time when Poland is seeking to increase defense spending following Russia’s invasion of neighboring Ukraine. The decision came on Friday, when Poland’s 10-year bond yields exceeded 9% for the first time in more than 20 years, as investors began to demand a higher risk premium in the face of accelerating inflation, the threat of losing billions in EU funds, and the central bank’s surprise decision not to raise interest rates in October. Polish 10-year bond yields over the month. Source: stooq.pl On Thursday, just before Polish yields reached their peak, Bloomberg reported that they were rising at the fastest rate in the world.
Analysts at Peko bank pointed
That 10-year bond yields had risen by more than 300 basis points over the month. “A feverish search is underway for the level at which investors interested in Polish securities will appear,” they said. BNP Paribas analyst Wojciech Stephine, quote by Bloomberg, said that “things have gotten crazy” and the VP Financial Email Lists central bank’s October decision not to raise interest rates despite surging inflation “was the straw that broke the camel’s back also quote by Bloomberg. “Poland’s policy mix is absolutely inappropriate for the current environment, bad for markets, bad for inflation.
This would be a massive hit to our economy
As we are talking about more than 500 billion zloty. This element has a very big impact on the rising yield rates on our government bonds,” Kaczynski said. Yields have since fallen after Poland’s Prime Minister Mateusz sought to reassure investors concerned about the lack of a firm response to inflation, which is at a 25-year high. On Saturday he said that national fiscal policy “will aim to bring inflation under control”, pledging to tighten expansive fiscal policy. “In domestic fiscal policy, we will aim to tighten it in the near term. We are not planning any further spending beyond that already budgeted,” said Borowiecki. “We will approach… attracting capital from BZ Lists outside accordingly. I am already in contact with many financial institutions from many countries around the world to stimulate interest in Polish debt.