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Poland

The use of commercial paper as an alternative way to raise capital is becoming increasingly popular in Poland. The first Polish commercial paper was issued in 1992 under the name "commercial coupons". Since that time a growing number of entities have decided to take advantage of this financial instrument.

Polish commercial paper may be issued on different legal bases. Unlike, for example, US law, Polish law does not define commercial paper as securities. Indeed, under the present practice it takes the form of bills of exchange, bonds or civil receivables. The first two types of security are issued under the appropriate acts. The use of the latter, however, raises certain doubts. Nevertheless, despite diversification of their legal status, they have common features such as short-term maturity (less than one year, mostly one, three or six months), high denomination (from $2,300 to $230,000), the issuance of securities taking place on a discount basis, lack of collateral, rolling over issues and non-introduction to public trading. The last feature permits issuers to avoid restrictions set out by the Public Trading in Securities Law Act of 1997.

Given their high denominations, investments in Polish commercial paper are mostly made by institutional investors. At this time, trading on the secondary market is insignificant but this might change due to the projected commencement of activity by the Central European Rating and Analysis Centre in Warsaw.

Ludomir Biedecki

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