Published: May 15, 2020
Central and Eastern Europe was on course to have an historic year for all the right reasons with Poland stunning markets to become the first ever emerging market name to print negative yielding euro debt. However, the Covid-19 pandemic sent credit spreads across the globe reeling and equity markets plunging record percentage points in a day, leaving investors and borrowers trying to decipher how to deal with the massive volatility.
The Republic of Poland astounded markets in February when it printed the first ever negative yield in euros from any global emerging market issuer, as analysts predicted support for Central and Eastern European sovereigns following another rate cut at the US Federal Reserve.
Poland printed a €1.5bn zero coupon 2025 bond with the deal pricing at 19bp over mid-swaps, equal to a yield of minus 0.102%.
This is the first time an emerging market issuer has ever sold negative yielding syndicated debt in euros.
“Notwithstanding negative political news flow in Poland,” said Gintaras Shlizhyus, a financial analyst at Raiffeisen Bank International, before markets were rattled by coronavirus, “it appears that EU dedicated funds were prepared to accept very moderate yield pickup in exchange for higher quality EU member state paper.”