The first series of bonds falls in mid-May. The Ministry of Finance has to pay investors 1.5 billion francs. Another repayment is in August – 375 million francs. To this must be added the costs of servicing debt maturing in the next few years – some 100 million francs. Ministry admits that the recent strengthening of the franc to the golden mean that all will cost more than expected, constructing this year’s budget. While? Ludwik Kotecki, chief economist at MF , this increase is estimated at approx. 0.2 percent. overall limit of total debt service costs, which the Ministry has calculated for less than 32.3 billion zł. Converting it to gold, expensive franc will cost the state money in addition approx. 65 million zł .
However, the Ministry of Finance did not really need to worry. The chief economist of the Ministry notes that the franc debt is only 2 percent. total debt of the Treasury. And with the money on his expensive service should not be a problem. – The higher the cost will be offset by lower costs of other titles, mostly falling interest rates in the domestic market and lower implementation borrowing needs in 2014. – Ludwik Kotecki said. He adds that the redemption of foreign currency debt is usually followed by the exchange, which the ministry gathered earlier.
Kotecki may be right when betting decrease maintenance costs of debt issued in the country, because after last week decision ECB Polish bond yields fell to a record low. The ECB decided to start from March asset purchase program, which intends to spend 60 billion euros a month.
On Friday late afternoon securities profitability was 2,085 ten percent, five-year – 1.73 percent. The lowest levels in history. Maciej Popiel, dealer bond market in PKO BP , said the mood among investors is very good, and a clear trend – a large demand for bonds pushes down their profitability. Encourage buyers including high real interest rates. – The ECB is the flow of cash into the market, because the central bank will buy securities. The stream of money may flow out of the euro zone. One of the markets that will benefit the most in this is Poland – says Popiel. According to him, from the perspective of the issuer perfect conditions. – Bonds at auctions sell very well. There will be savings in the cost of debt service, debt ranks as the ministry at lower yields – says the dealer.
Despite this excellent situation on the domestic market, the Ministry of Finance does not cancel plans for potential emissions abroad. Or is the Swiss franc – the resort does not want to submit clear declarations. Ludwik Kotecki notes that so far the sale of bonds on the Swiss market was treated as a supplementary source of fundraising, without a lot of importance to the process of borrowing needs of the budget. – Decisions on the issue of bonds on the market are made from the point of view of implementation of the debt management strategy in changing conditions, particularly the assessment of the expected cost of financing and the associated risks. The exchange rate is one, but not the only one of the factors taken into account – Kotecki said.
Polish Bank Association member banks presented a package of measures to help borrowers indebted in Swiss francs. The most important recommendation is to take into account the negative rate LIBOR loans. Therefore the authorities stressed, however, that if the market rate continued to decline, the nominal interest rate mortgages will not be able to be less than 0 percent. – On the basis of the existing rules and known my doctrine, it is not possible to credit interest rate was negative, that is, to receive payment for the borrower that have benefited from the loan – said on Friday Jerzy bubble, vice president of the PBA. Cheapest loans in CHF have margins of less than 1 per cent., And LIBOR is currently at 0.8 percent. Among other actions recommended by the PBA banks to reduce the spread rate for repaying installments, the extension at the request of customers of credit or temporary suspension of the repayment of the capital part of the debt, the abandonment of additional protection and credit insurance, when its value exceeds the value of the collateral, and more flexible rules for restructuring debt. What does the latter, it is not specified, but you can guess that it is eg. For redemption of the loan. At the same time because the PBA announced that it will ask the Ministry of Finance with a request for implementation of the changes so that the redemption was not treated as income of the client.
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