Polish cities to issue less bonds
Polish cities and communities plan to issue bonds worth only PLN 2.3 bln, which is two times less than as in the previous two years, despite the fact that the market is very young, Polish daily Dziennik Gazeta Prawna wrote May 29.
This announcement came before recent budget and investment limitations imposed on local governments by the state. The organizers of the bond issue are very optimistic about the event and do not lose hope that the market will come to their defense. They count on local companies in which the local governments have a stake to buy out the bonds.
The market is still only beginning to find its way. Only three years ago did local governments start issuing bonds. Initially, yearly value of the bonds totaled as much as PLN 4.4-4.5 bln. The value is likely to drop by 50% this year, mainly due to major Polish cities such as Gdańsk, Poznan, Warsaw and Wroclaw which turn to other sources of financing.
“By end of June this year we plan to have signed all the agreements relating to EU subsidies, including those which refer to the largest investments,” Teresa Blacharska, the treasurer of the city of Gdansk, told the newspaper. “We will thus be able to get back the funds we had invested, which will considerably decrease our need for cash.”
Warsaw’s expenses in 2012 will increase by PLN 1 bln but the city has enough funds so that it will not need to issue bonds or take up loans to close the budget. Poznan refuses to issue bonds this year because it is taking a break from major investments and will therefore have no need for additional cash.