In April 2025, Poland experienced a significant surge in treasury bond sales, marking the highest monthly sales since last summer. Investors purchased nearly 7.4 billion PLN in treasury bonds, a notable increase from March's sales of approximately 5.5 billion PLN. This uptick reflects growing confidence among Polish investors in government securities, with total sales for the first four months of the year reaching 24.7 billion PLN, up from 22.5 billion PLN during the same period last year.
The most popular instruments in April were fixed-coupon three-year bonds, which boasted an interest rate of 5.95% per year. These bonds accounted for nearly half of all sales, generating 3.6 billion PLN for the Ministry of Finance. Interestingly, this figure includes 1.9 billion PLN that flowed in during the last days of the month, indicating a last-minute rush to invest before interest rates were set to decrease.
Starting May 1, 2025, the Ministry of Finance announced a reduction in the interest rates for several treasury bonds, including a 0.2% cut for the three-year fixed-coupon bonds, bringing the rate down to 5.75%. This decision followed a week of speculation and is expected to influence investor behavior in the coming months.
In addition to the three-year bonds, 12-month variable-rate bonds also saw increased interest, approaching sales of 1.8 billion PLN, the highest figure in two and a half years. These bonds are pegged to the main interest rate set by the National Bank of Poland (NBP), making them attractive to investors despite the anticipated cuts in interest rates.
April also witnessed a robust performance from treasury bond funds, which earned an average of 2.94%, slightly outperforming the Treasury Bond Spot Poland (TBSP) index, which gained 2.86% during the same month. This marked the TBSP index's highest rate of return in 27 months, with a year-to-date increase of 7.52%, surpassing the entire return for 2024.
Over the past five years, from April 2020 to April 2025, the TBSP index has outperformed 60% of bond funds, growing by 7.51%. In contrast, the average performance of treasury bond funds was 8.29%, indicating that while many funds have done well, a significant portion still lags behind the index.
2023 proved to be particularly favorable for debt funds, with two-thirds of them surpassing the TBSP index. However, the following year saw a decline, with only 35% managing to outperform it. Among the standout performers were Rockbridge Obligacji Aktywny 2 and Pekao Obligacji - Dynamiczna Alokacja 2, both of which consistently outperformed the index five times since 2021.
Rockbridge Obligacji Aktywny 2 achieved a remarkable five-year return of 45.3%, nearly six times higher than the average. Meanwhile, PKO Obligacji Skarbowych Średnioterminowy has been performing steadily, beating the benchmark by more than 2 percentage points over the past 36 months. Despite a weak performance in 2022, this fund has shown signs of recovery, as evidenced by improved ratings in monthly rankings.
On the flip side, index funds such as inPZU Polskie Obligacje Skarbowe O and Beta ETF TBSP Portfelowy FIZ have consistently underperformed the TBSP index by approximately 0.6 percentage points annually. These funds have not managed to beat the benchmark since their inception, which aligns with their intended purpose of closely tracking the index.
The recent performance of treasury bonds and funds has been bolstered by a broader positive sentiment towards domestic assets. April 2025 may have convinced the last skeptics of the strength of both stocks and bonds in Poland. Moreover, the beginning of May brought news of Lenovo and Motorola opening their first showroom in Poland, the second in Europe, in Warsaw, further demonstrating the growing interest in the Polish market.
However, experts caution against complacency. Tomasz Pawluć, a portfolio manager at Pekao TFI, suggests that while the local market has strengthened, the outlook for U.S. Treasury bonds remains moderately negative. This sentiment reflects a global trend where emerging markets are gaining attention as investors search for promising opportunities.
In the context of Poland, the upcoming changes in regulations could further enhance the bond market's potential. For the market to flourish, strong partnerships with regulatory bodies are essential, alongside investments in workforce training and health. As the Polish economy continues to recover, the outlook for treasury bonds appears promising, with expectations of continued growth and stability.
As we look ahead, the financial landscape in Poland is poised for transformation, driven by both investor confidence and regulatory support. The treasury bond market's recent performance is a testament to the resilience and attractiveness of Polish assets, making it a focal point for investors seeking stability and growth.
