Kuźmiuk: Polish bonds bear the lowest interest rate ever. "Record was set last Friday"

According to the Finance Ministry, a record was set last Friday; the yield on Polish 10-year treasury bonds fell well below 2% and amounted to only 1.653%.

Everything indicates that this downward trend may still continue, as Poland is perceived by potential investors in our debt securities as a country with a stable economy and good public finances.

This is good information because this year we have bonds issued 10 years ago under Donald Tusk’s rule worth nearly PLN 24 billion to redeem, while on bonds worth PLN 10 billion we will pay interest of 5.25%.

So if the interest rate on Polish 10-year bonds remained below 2% as it is now, we would be able to reduce the cost of servicing our public debt by at least PLN 10 billion a year.

Let us remind that the Ministry of Finance estimates the budget revenues for 2020 at the level of PLN 435.3 billion, whereas the budget expenditures are to be realized at the same level, which indicates that the budget will be balanced.

It is these hard macroeconomic data concerning the Polish economy and the condition of public finances that enabled the Minister of Finance to place on the Polish Treasury bond market in January a value of EUR 200 million with a negative interest rate of -0.31%, and already in February 5-year bonds for as much as EUR 1.5 billion with an interest rate of -0.102%.

This was a historic event, thus Poland joined the elite group of countries that have been issuing such bonds on a wider scale for some time now, namely Germany and Switzerland, and much less frequently the Netherlands, Austria, Finland and Denmark.