Beating Germany Makes Poland Haven in Europe

Polish bonds beat German bunds and U.S. Treasuries in risk-adjusted returns since Europe’s debt crisis started three years ago, indicating the country that restructured a $35 billion debt load two decades ago is becoming a regional haven.

The BLOOMBERG RISKLESS RETURN RANKING shows the Bloomberg/EFFAS Poland Government Bond Index of local-currency returns increased the most among 25 countries in the three years through Feb. 6. The Polish gauge advanced 8.3 percent after taking into account price swings, compared with 4 percent for German bundsand 3 percent for U.S. Treasuries. Polish debt, ranked ninth in total return, had the second-lowest volatility after Japan.

Foreign investors boosted holdings of Polish bonds to a record last year, lured by yields of about 5.3 percent on average, more than double the rates in Germany and the U.S. Poland, the only European Union nation to avoid a recession in 2009, is less vulnerable to bond marketswings because pension funds are required to invest at least 95 percent of their assets locally. UniCredit SpA and KBC Asset Management say the rally will continue as Prime Minister Donald Tusk seeks to cut the budget gap by almost half.

Read more: http://www.bloomberg.com/news/2012-02-08/beating-germany-makes-poland-haven-in-europe-riskless-return.html