Foreign debt reduction by $942 million using TPSA privatization proceeds

Poland called $942 million out of $5.3 billion outstanding Brady bonds yesterday, using proceeds form the privatization of Telekomunikacja Polska S.A. (TPSA). The Finance Ministry said in an announcement in the Financial Times that it would redeem all of the outstanding New Money Bonds and Collateralized Discount Bonds on October 31, the date their interest payment is due. "Next year's debt-servicing costs are high... and we are seeking to lower them," said Finance Ministry debt department head Arkadiusz Kaminski. The decision means that $138 million worth of the bonds will be redeemed 9 years ahead of time, and $804 million 24 years early. This is the third occasion that the Polish government is redeeming its Brady bonds ahead of time. Such transactions had earlier been conducted in 1997 and 1998. The government is expecting to receive payment for the 35% stake in TPSA from France Telecom and Kulczyk Holding today. (Gazeta Wyborcza, p 21; Reuters)