Public Debt Department of the Ministry of Finance, Poland would like to inform that, with effect from January 2017, it introduces changes to the policy of determining the structure of the offer on the Treasury bonds auctions.

The main purpose of introducing a new model is to decrease the secondary market volatility, especially in the periods before the auctions, as well as to limit the risk of the mismatch between the offer on the auction and current market sentiment.

As a result, the introduced changes should enhance the efficiency and liquidity of the Treasury securities market. The proposal of the new policy was consulted with Primary Dealers and other domestic and foreign investors.

The main assumptions of the new model are:

1) All 5 currently issued bond types (on-the-run OK, PS, DS, short-term and long-term WZ bonds) will be offered on every auction (both outright and switching one). Additionally, WS or IZ bonds could also be offered as a sixth bond type, depending on the market demand.

2) Overall quarterly and monthly supply sizes, as well as offer size on a single auction, will not be increased compared to the current model.

3) Borrowing requirements financing through the Treasury bonds auctions, in principle, will be conducted according to the objectives of "The Public Finance Sector Debt Management Strategy in the years 2017-2020", in particular maintaining of the average maturity of the domestic debt at a level not lower than 4 years and aiming at increasing it to 4.5 years ultimately (as of the end of November 2016 the average maturity was 4.44 years).

4) The sale of a single bond type on the auction will be limited to the 50% of the upper value of the offer range for the auction, provided that the submitted bids allow.

5) At the same time, the Ministry of Finance, whenever possible, will try to maintain the bid/cover ratios for the bonds offered on the auction on the levels not lower than averages for 2016.

6) The rules of the offer and sale on the supplementary (top-up) auctions remain unchanged.

7) The efficiency of the new model will be reassessed after the first quarter of 2017. In case of switching auctions, taking operational considerations into account, the reduction in the number of offered bond types is possible (subject to consultations with Primary Dealers, announced not later than in a monthly issuance plan).