* Spread set at 150 bps above mid-swaps, narrow end of range
* Tap priced some 30 bps wider vs previous issue
* Follows successful issues in euro zone periphery
(Updates with amount, adds Hungarian, Romanian context)
By Dagmara Leszkowicz
WARSAW, Jan 13 (Reuters) - Poland issued 1 billion euros in
new debt on Thursday, reopening a 10-year Eurobond and setting
spreads at 30 basis points higher than the original issue,
Thomson Reuters market unit IFR reported.
The issue was the first test of appetite for emerging
European Eurobonds in the new year and follows successful debt
placements by southern euro zone members Portugal, Spain, Italy
and Slovenia this week.
The benchmark-sized issue is a tap of a 1 billion euro, 4.0
percent coupon bond <0#PL054388209=> issued at 120 basis points
above mid-swaps in September. []
Bond yields have risen across Europe in the new year on
renewed worry over the financial health of countries in the euro
zone periphery and rising expectations that central banks,
including Poland's, will raise interest rates.
The tap was priced at 150 basis points above mid-swaps, the
lower end of an intial 150-155 range, IFR reported, citing a
lead manager. The bond was trading at a yield of 94 bps over
10-year German bunds.
"The spread is wider by some 30 basis points compared to the
previous tender, but the current external environment is much
more difficult now," said one Warsaw-based dealer.
The dealer said the ministry may have tried to issue the
debt this early in the year because it fears the euro zone's
problems could deteriorate and drive up Polish borrowing costs.
Poland's zloty <EURPLN=> is also around 3 percent stronger
against the euro this year and policymakers believe it may
strengthen further -- making funds gained in euros later in the
year worth less to the government. []
Deutsche Bank, <DBKGn.DE>, UniCredit <CRDI.MI>, ING <ING.AS>
and Societe Generale <SOGN.PA> lead managed the deal.
DEMAND FOR EURO DEBT
The bond follows forays into the market by euro zone
countries this week that have drawn strong demand. Eastern
European Euro zone member Slovenia sold a 10-year, 1.5 billion
euro bond on Monday that was oversubscribed. []
Other countries are also eyeing euro markets, with Romanian
deputy Finance Minister Bogdan Dragoi saying Romania will be
ready to issue euro medium-term notes from the end of the month
and that Bucharest plans to tap foreign markets twice in 2011.
Hungary plans to sell foreign currency debt worth 4 billion
euros in 2011 to refinance expiring debt. Its debt agency AKK
has said that it planned to cover that need as soon as possible,
but it is unlikely to issue the entire amount in January.
Analysts said there was a good chance that the next issue
will be denominated in dollars and could be linked to news about
the government's spending cut plans. The government is expected
to unveil its reform package around the end of February.
Last year Poland issued 5.25 billion euros of
euro-denominated bonds, $1.5 billion of dollar-denominated bonds
and 625 million in Swiss franc bonds.
The country is rated A2 by rating agency Moody's and A- by
Standard & Poor's and Fitch.
In December Deputy Finance Minister Dominik Radziwill told
Reuters the ministry also plans to issue Swiss franc- and
dollar- denominated bonds and is considering yen-denominated
bond issuance this year, though he gave no details.
Poland's borrowing needs are estimated at around 167 billion
zlotys ($56.70 billion) this year, some 26 billion zlotys less
than the figure planned for last year.
(Additional reporting by Sandor Peto and Marius Zaharia;
writing by Michael Winfrey; editing by Ron Askew and Toby
Chopra)
