* Currencies firm, zloty, forint lead gains
* Hungary, Poland debt issues show improved mood
(Recasts with new comments and prices.)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, July 20 (Reuters) - Central European
currencies and government bonds firmed on Monday after Hungary
sold a one billion euro bond, demonstrating that getting to
market financing is increasingly easy for the region's states.
A rise of equities in the world and the region also confirmed
that appetite for risk remained relatively strong. In Central
Europe Poland's stock market led the gains, with the WIG20
index<> rising by over five percent.
The Polish zloty<EURPLN=> firmed one percent to 4.284
against the euro by 1343 GMT, the Hungarian forint<EURHUF=> 0.8
percent to 272.78, the Czech crown<EURCZK=> gained 0.2 percent
and the Romanian leu<EURRON=> 0.1 percent.
Late last week Hungary priced a 1 billion euro, 5-year
Eurobond at 395 basis points over mid-swaps, slightly tighter
than the initial guidance, and the deal attracted orders worth
2.9 billion euros. []
The issue followed a Polish sale of $2 billion in
dollar-denominated bonds, and Hungary's forint-denominated bond
auctions also attracted strong demand late last week.
Polish government bonds firmed on Monday and Hungarian bonds
also regained ground after some early selling at the long end of
the yield curve following strong gains for weeks. Bonds in the
Czech Republic where yields are much lower eased slightly.
Hungary is among the states which needed international aid
due to financial difficulties exacerbated by the global crisis,
but a rise in the global appetite for risk in the past months
improves the access of the region's emerging economies to market
financing, dealers said.
"Hungary has been able to sell good amounts of bonds in a
very good global sentiment," one Budapest-based trader said.
"The rising appetite for risk also appeared in Poland," the
trader added. "Those buyers who already wanted to see bigger
(bond supply) got reassurance...the question is whether the
higher supply levels can be maintained at later bond auctions."
Finance Minister Peter Oszko said Hungary will be cautious
with further international issues, adding that the next step
could be a rise in the volume of local issues.[].
Polish Deputy Finance Minister Dominik Radziwill said the
country may re-open its dollar bond issue.[]
A warning sign. however, was that Citigroup cut lending
lines to top banks in Kazakhstan, an emerging market further to
the east.[]
Central Europe's economies are part of a more stable region,
the European Union, unlike Kazakhstan, and although Kazakh banks
have been hit much harder, Citigroup's move indicated that some
western banks remain cautious over commitment to the East.
Some market participants said the zloty may come under
pressure relative to the forint in the short term because
Poland's fiscal policy was more lax, while others said the zloty
was bound to firm.
"... as long as stocks firm, we should strengthen further,"
said Przemyslaw Winiarczyk, dealer at Millennium bank.
Hungarian markets await a central bank meeting next week
where the bank is expected to cut interest rates.
"If the bank's comments point to a series of rate cuts, the
markets are unlikely to weaken," one trader said. "If you look
at short-term yields the (9.5 percent) base rate may go down to
7.0-7.25 percent in nine months."
------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.828 25.886 +0.22% +3.58%
Polish zloty <EURPLN=> 4.284 4.327 +1% -3.94%
Hungarian forint <EURHUF=> 272.78 275 +0.81% -3.38%
Croatian kuna <EURHRK=> 7.331 7.334 +0.04% +0.46%
Romanian leu <EURRON=> 4.236 4.24 +0.09% -5.23%
Serbian dinar <EURRSD=> 92.967 92.831 -0.15% -3.75%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -1 basis points to 151bps over bmk*
4-yr T-bond CZ4YT=RR -32 basis points to +156bps over bmk*
8-yr T-bond CZ8YT=RR +8 basis points to +301bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -10 basis points to +372bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +302bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +273bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -28 basis points to +720bps over bmk*
5-yr T-bond HU5YT=RR -65 basis points to +628bps over bmk*
10-yr T-bond HU10YT=RR -52 basis points to +526bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1543 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz, editing by Stephen Nisbet)
