2007年-世界发展银行全球_The_Polish_Fixed-income_Securities_Market___Recent_Developments_and_Selected_Policy_Challenges_78页_858kb

Summary of the Polish Fixed-income Securities Market

Core Content

This document provides an analysis of the recent developments and policy challenges in the Polish fixed-income securities market. It outlines the progress made in the money and government bond markets, highlights the growth of the sub-national bond market, and identifies key areas where policy reforms are needed to enhance market efficiency, transparency, and competitiveness. The report is authored by Michel Noel, Noritaka Akamatsu, W. Jan Brzeski, and Carlo Segni, and is part of the World Bank's Financial Services Policy Notes Series.

Recent Market Developments

Poland has made significant progress in developing the fixed-income securities market, particularly in the money and government bond segments. Key developments include:

• Money Market:

  • Represented about 10% of GDP between 2001 and 2004.
  • The introduction of short-term T-bills in 2002 helped compensate for the decline in NBP bills.
  • Sell-buy-back transactions grew rapidly after 2002, while classic repo transactions developed more slowly.
  • The Ministry of Finance (MOF) introduced a medium-term strategy to standardize and lengthen public debt maturities, leading to increased liquidity and narrower yield spreads in five- and ten-year segments.

• Government Bond Market:

  • The government has focused on deepening this market, which provides a strong foundation for other segments.
  • The average duration of government debt is still lower than that of European peers, and refinancing risks remain higher.

• Sub-national Bond Market:

  • Rapid growth, with about $1 billion in outstanding bonds by mid-2005.
  • Dominated by small, privately-issued bonds held by banks as lead underwriters.
  • The first municipal revenue bond was issued in December 2005.

• Corporate Bond Market:

  • Grew following the liberalization of bond issuance procedures in 2000.
  • Still relatively small compared to the equity and government securities markets.
  • Primarily a private placement market with low transparency.
  • Non-financial corporations and banks hold about two-thirds of corporate bonds, with insurance companies increasing their share.

Selected Policy Challenges

The report identifies several policy challenges and recommendations for improving the fixed-income market:

1. Liquidity Management in the Banking System

• The process of government cash management and coordination with NBP's monetary policy is well functioning.
• The non-remuneration of the single treasury account (STA) above a certain limit encourages the government to transfer excess cash to commercial banks or manage it in the money market.
• Strong liquidity management supports the development of the money market.

2. Development of the Classic Repo Market

• NBP can take measures to stimulate the repo market:
  • Review the functional design of the repo clearing module.
  • Support the development of a facility that provides liquidity against foreclosed securities.
  • Institute liquidity, risk management, and yield enhancement measures.
  • Broaden the scope of eligible repo participants.

3. Deepening the Government Bond Market

• MOF has made progress in creating a deep and liquid government securities market.
• To further support the non-government bond market, the government bond yield curve should be made more reliable.
• This requires:
  • Developing a calendar for long-term domestic bond issues.
  • Gradually increasing the issuance of long-term inflation-indexed instruments.

4. Stimulating the Non-government Bond Market

• Several measures are suggested to promote the development of the non-government bond market:
  • Centralize bond custody and deposit in the National Securities Depository (NSD) to improve transferability.
  • Support securitizations by closing regulatory loopholes for Special Purpose Vehicles (SPVs).
  • Simplify the distinction between public and private bond issuance.
  • Increase OTC market transparency by requiring post-trade reporting.
  • Encourage the development of credit derivatives (CDOs and CBOs).
  • Introduce multiple pension funds with different portfolio characteristics to diversify the investor base.

5. Reform of the Legal and Regulatory Framework for Local Government Borrowing

• A comprehensive reform is needed to reduce moral hazard and unlock the potential of the sub-national bond market.
• The reform should be structured on five pillars:
  • Fiscal Autonomy: Increase local governments' fiscal autonomy by removing tax ceilings and promoting asset-liability management.
  • Risk Pricing: Create conditions for investors to price sub-national risk, including abolishing the Treasury recovery loan instrument, adopting a local government bankruptcy law, and introducing variable risk-weighting ratios.
  • Market Transparency: Improve transparency by distinguishing between current and capital expenditures, requiring accrual accounting, and external audits.
  • Level Playing Field: Establish a level playing field by phasing out preferential loans and grants from environmental funds and encouraging securitization.
  • No Bail-out Policy: Clearly communicate a no bail-out policy to market participants to prevent moral hazard.

6. Bond Pooling and Enhancement Instrument

• There is strong interest in developing a bond pooling and enhancement instrument for small municipal corporations and municipalities.
• This instrument could be structured as a Special Purpose Vehicle (SPV) and cover various sectors such as water and sewerage, urban transport, and housing.
• The pooled bonds would have a minimum size of about 100 million zlotys and could be enhanced by liquidity facilities from international financial institutions.
• The NBP and World Bank could jointly undertake a feasibility study to assess the potential of this instrument.

Key Recommendations

Conclusion

The Polish fixed-income market has shown positive development, particularly in the government and sub-national segments. However, further policy reforms are necessary to enhance market efficiency, transparency, and competitiveness. These include improving the repo market, deepening the government bond market, and reforming the legal and regulatory framework for local government borrowing. The development of a bond pooling and enhancement instrument is also proposed to support small municipal issuers.