* Romania cuts T-bill auction, yield at 7 pct ceiling
* Hungary sells all bonds, ups 10-yr offer; yields drop
* Currencies illiquid, mixed after recent gains
(Adds bond auctions, updates markets)
By Marton Dunai and Jason Hovet
PRAGUE/BUDAPEST, July 15 (Reuters) - Eastern European
currencies were little changed on Thursday as investors took
stock after recent gains and debt auctions in Romania and
Hungary gave a mixed picture of the region's capacity for
raising funds.
Romania continued a recent trend of cutting auctions as it
stuck to a self-imposed yield ceiling of 7 percent, while
Hungary sold more bonds than it aimed to, upping its 10-year
offer as yields adjusted to lower levels in the secondary
market.
Bucharest sold 470 million lei ($141.4 million) in 9-month
treasury bills, less than the 750 million on offer. The accepted
yield was 6.99 percent. []
Since May, the Finance Ministry has rejected bids or sold
significantly less debt than planned, raising concerns over its
ability to finance its gaping budget deficit. []
To compensate for failed tenders, the ministry tapped the
money market earlier this week, borrowing 1.1 billion lei in
2-week deposits, which analysts said might hurt the leu.
The Hungarian bond auction went smoothly. []
Yields fell by about 10 basis points but quickly returned to the
auction's levels in thin trade.
"Once the auction was complete, the market all but died," a
bond dealer said in Budapest.
The forint <EURHUF=> gave up 0.2 percent against the euro by
1212 GMT. The Polish zloty <EURPLN=> and the Romanian leu
<EURRON=> each edged 0.1 percent lower, while the Czech crown,
the region's top gainer this year, <EURCZK=> added 0.2 percent.
"There have been concerns about the Romanian budget, and the
Hungarian IMF talks were said to be shaky, but that's not behind
the weakening," a currency dealer in Budapest said. "Investors
just wanted to test whether the recent gains might have been
overdone."
Stocks recouped earlier losses and were higher together with
Western peers, with Prague <> up by 0.4 percent at 1224 GMT,
Warsaw <> up 0.3 percent and Budapest <> 0.2 percent.
BOND AUCTIONS IN FOCUS
Debt auctions in the Czech Republic and Poland were mixed on
Wednesday, with poor demand hitting the Polish sale as
expectations of a rate hike this year build.
Polish bond yields were steady on Thursday, while Czech bond
yields edged up and found little relief in news the government
is looking at issuing a dollar bond as part of its foreign
issuance to meet record high borrowing needs in 2010.
[]
The Polish Monetary Policy Council said in its June meeting
minutes that economic growth alone will not improve public
finances and reforms were needed. []
The Czech Finance Ministry slightly raised its economic
growth forecast for this year, but left its public sector
deficit forecast unchanged. []
In Hungary, the International Monetary Fund and European
Union hold talks with the new centre-right government over the
country's aid package. []
A business website reported on Wednesday the lenders want
the Hungarian government to declare that it is committed to
cutting the budget deficit below 3 percent of GDP next year.
"The end result of the talks will matter: if the IMF report
on this (2011 budget) is negative, that could trigger forint
weakness -- but until then I don't think this will have a
significant impact (on the market)," the dealer said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.413 25.459 +0.18% +3.56%
Polish zloty <EURPLN=> 4.059 4.055 -0.1% +1.11%
Hungarian forint <EURHUF=> 278.49 277.98 -0.18% -2.92%
Croatian kuna <EURHRK=> 7.214 7.214 0% +1.32%
Romanian leu <EURRON=> 4.256 4.251 -0.12% -0.44%
Serbian dinar <EURRSD=> 104.44 103.957 -0.46% -8.2%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -8 basis points to +81bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +123bps over bmk*
10-yr T-bond CZ9YT=RR -6 basis points to +118bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +395bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +372bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +311bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +587bps over bmk*
5-yr T-bond HU5YT=RR -8 basis points to +557bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +467bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1412 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet;
Editing by Ruth Pitchford, John Stonestreet)
