Poland is selling T-bills for the first time in more than four years to help meet record government borrowing needs by tapping into the banking sector’s ample short-term liquidity.
The Finance Ministry plans to raise as much as 6 billion zloty ($1.97 billion) in 45-week securities at an auction on Monday, departing from its policy of issuing only longer-term bonds for the first time since the Covid-19 pandemic. The deadline for investors to place bids is 11am in Warsaw.
With Poland’s fiscal deficit set to top 5% of economic output for a third straight year in 2025, the ministry had said it would start selling shorter-dated securities to supplement its bond-heavy first quarter issuance, during which it seeks to raise as much as 75 billion zloty in debt. Last week, the sovereign also issued EUR3 billion ($4.21 billion) in Eurobonds.
By turning to T-bills, the ministry is boosting the supply of short-term securities popular with local retail investors. Furthermore, Poland’s commercial lenders each week park about 370 billion zloty in 7-day central bank bills, highlighting the financial sector’s hefty liquidity.
“It seems to be a good moment for a T-bill comeback,” said Michal Holda, head of debt investments at mutual fund Santander TFI. These securities will help “diversify portfolios of short-term funds, as without T-bills they now face a scarcity of bonds with looming maturity dates”.
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Potential bets on rate cuts later in 2025, which would automatically reduce the yield on NBP-bills, may also help drive demand, Holda said.
The ministry said last month that market demand for short-term debt instruments was the main reason why it’s returning to T-bills, with at least one such auction expected each month.
Short-term debt strategies attracted 22.9 billion zloty of net inflows over the first 11 months of 2024, far more than other types of mutual funds, according to data from industry lobby group IZFiA.
Nevertheless, such sales will reduce the average maturity of Poland’s local-currency debt, which according to data compiled by Bloomberg currently stands at 4.3 years — already shorter than those of regional peers — with Hungary at 5.3 years and the Czech Republic at 6.3.
