Poland sold 1 billion zlotys of inflation-linked and floating-rate bonds on Wednesday, but investors said demand was poor after lower than expected inflation in February and comments from the finance ministry regarding possible interest rate swap transactions. The finance ministry sold 0.71 billion zlotys of floating-rate bonds maturing in 2021 and 0.32 billion zlotys of CPI-linked IZ0823 bonds due 2023.
The average yield on the IZ0823 paper was 3.055 percent, some 25 basis points higher than at a previous tender a month ago. "The tender wasn't successful. The floating rate bonds have been hit by recent comments by the deputy finance minister about a possible interest-rate swap transaction," said one Warsaw-based dealer. Meanwhile, "lower-than-expected inflation data for the last month hurt CPI-linked bonds", the dealer added.
Poland's swap curve lowered by 9 basis points on Monday after Deputy Finance Minister Dominik Radziwill told Reuters the ministry was ready carry out interest rate swaps, a move aimed at cutting its debt costs.
Statistics office data the following day showed inflation in February unexpectedly remained flat at 3.6 percent on an annual basis, against analysts' expectations of 3.9 percent rise. The tender had no impact on the secondary market, the dealer said.
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