* Enthusiasm over ECB liquidity move helps Hungarian bonds
* Polish bonds firm on supply change
* FX rise slightly, crown outperforms
(Adds fresher comments, updates prices)
By Gergely Szakacs and Dagmara Leszkowicz
BUDAPEST/WARSAW, June 26 (Reuters) - Hungarian bonds rose on
Friday, helped by the European Central Bank's moves this week to
boost banking liquidity, while Poland's paper rose after it said
it would not offer long bonds in the next two months.
It accompanied a rise in global risk appetite that lifted
Central and Eastern currencies a touch higher, led by the Czech
crown.
The surge in Hungarian bonds stalled briefly after the
deputy head of the state debt agency AKK said it would raise
offered amounts at bond tenders after the successful auctions of
the past weeks. [].
But dealers said, following increased interest in recent
sessions, enthusiasm that the ECB's record injection of cash
through a tender on Wednesday meant banks would not be left
short helped push yields around 10 basis points down across the
curve.
"The watershed was the ECB action earlier this week when
they pumped liquidity into (euro zone) markets," said a
Budapest-based fixed income trader.
"You can see now that money is flowing into papers (bonds),
not only in Hungary. The ECB infusion dispelled earlier concerns
that banks in Europe will not have sufficient funds."
Investors have returned to emerging central European debt as
markets have slowly thawed from a freeze in late 2008 and
earlier this year.
Yields have fallen several percentage points but have crept
back up as governments have begun to return to borrow from the
market in force to cover public deficits that have ballooned in
the crisis due to higher social spending and lower tax revenue.
The spread of Hungary's three-year bond over German bunds
dipped 24 basis points to 809 basis points, while the 10-year
dipped 45 to 654 basis points.
In Poland, the Finance Ministry said it would not offer
bonds with maturities of 10 years or more at least until
September. []
CROWN HIGHER
The crown traded near its highest levels this year, one day
after the Czech central bank surprised markets by leaving
interest rates on hold at an all-time low of 1.5 percent.
Markets had expected a quarter point cut. []
Deutsche Bank said in a note that the Czech Republic was
less exposed to foreign currency lending than others in a region
which has been buffeted by doubts over whether it can refinance
public and private borrowing -- or at what cost.
"Portfolio outflows are likely to continue to pose problems
for both the zloty and forint and therefore crown
out-performance is likely to continue," the bank said.
At 1507 GMT the crown traded at 25.978 against the euro,
firmer by 0.24 percent, the Romanian leu<EURRON=> firmed 0.21
percent, the Hungarian forint<EURHUF=> 0.15 percent, and the
Polish zloty<EURPLN=> 0.07 percent.
The region's central banks are under pressure to cut
interest rates to bolster economies suffering from a slowdown in
the euro zone, but are also keeping one eye on currencies which
took a battering after the financial crisis worsened last year.
Markets are increasingly convinced the Czechs, and possibly
the Poles, are nearing the end of their easing cycles -- meaning
the premium for holding their currencies may remain higher than
earlier thought.
Hungary's central bank also held its benchmark lending rate
at 9.5 percent on Monday and some dealers said that made it an
attractive carry trade in comparison with other countries in the
region. Polish rates are at 3.5 percent, Czech rate at 1.5 pct.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.978 26.04 +0.24% +2.98%
Polish zloty <EURPLN=> 4.509 4.512 +0.07% -8.74%
Hungarian forint <EURHUF=> 276.49 276.9 +0.15% -4.68%
Croatian kuna <EURHRK=> 7.266 7.305 +0.54% +1.36%
Romanian leu <EURRON=> 4.215 4.224 +0.21% -4.76%
Serbian dinar <EURRSD=> 94.07 94.042 -0.03% -4.88%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +36 basis points to 158bps over bmk*
4-yr T-bond CZ4YT=RR +3 basis points to +180bps over bmk*
8-yr T-bond CZ8YT=RR -1 basis points to +288bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -6 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +332bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +295bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -24 basis points to +809bps over bmk*
5-yr T-bond HU5YT=RR -56 basis points to +737bps over bmk*
10-yr T-bond HU10YT=RR -45 basis points to +654bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1707 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Reuters bureaux, writing by Marton Dunai and
Dagmara Leszkowicz, editing by Patrick Graham)
