Polish BRE Kicks Off First Polish Corporate Bond Index

By Patryk Wasilewski

WARSAW--Poland's BRE Bank (BRE.WA) wants to tap into the country's expected corporate bond issuance boom by starting the first index that will monitor the papers' performances, BRE Bank Chief Executive Cezary Stypulkowski said Thursday.

For years the Polish corporate bond market was dormant as companies preferred to seek funding through bank loans or share issues at the Warsaw stock exchange. However, as sources of cash became less available and more expensive the Polish corporate bond market has been growing rapidly.

The value of tradeable corporate bonds rose to 25 billion zlotys ($8.1 billion) in September from only PLN5 billion at the beginning of 2011, BRE Bank said in a presentation. The bank said it expected the trend to continue in coming years, partially due to changes to the country's public pension system.

Those changes in a controversial government overhaul will see nationalization of government bonds held by the country's obligatory--but privately managed--pension funds and will forbid future purchases of state papers. The move is expected to significantly increase the funds' appetite for other fixed-income instruments, mainly corporate bonds.

BRE isn't the only financial institution betting on rapid growth of the Polish market. Earlier this year Moody's Investors Services opened its office in Warsaw for the very same reason.

Write to Patryk Wasilewski at [e-mail]

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