* Hungary bonds, equities fall, partly on pension plans
* Euro zone debt crisis weighs on sentiment in region
* Romania sells EUR 1.3 bln 3-yr bonds, more than planned
(Adds Hungary bonds, Romania cbank)
By Jason Hovet and Sandor Peto
PRAGUE/BUDAPEST, Nov 25 (Reuters) - Hungarian assets fell
across the board on Thursday on government plans to push private
pension fund holders back into the state pension scheme and as
the euro zone debt crisis continued to dampen sentiment in
central Europe.
The Hungarian forint <EURHUF=> fell 0.8 percent versus the
euro by 1453 GMT to 277.18, while the Polish zloty <EURPLN=>
shed half a percent to 3.975. The Czech crown <EURCZK=> eased
less than 0.1 percent to 24.69 while the Romanian the leu
<EURRON=> gained 0.2 percent to 4.298.
Hungary on Wednesday announced planned legal changes that
could effectively force private pension fund members to transfer
all their 3 trillion forints ($14.49 billion) worth of assets
into the state pension system next year. []
"The dominant factor for the forint is still the Irish,
Portuguese, Spanish debt story," one dealer said. "But it's
possible that the local story contributed more to the rise in
(government debt) yields."
Hungarian government bonds regained some composure in late
trade, but were still higher by 10-15 basis points from
Wednesday and traded near this year's highest levels.
The government cut its 12-month Treasury bill auction to
prevent a surge in yields -- the first such cut at a domestic
debt auction since early September -- but the average yield rose
to 6.05 percent from 5.94 two weeks ago. []
"The government is eliminating the biggest domestic buyer of
bonds (private pension funds) and it will be exposed to foreign
investors," one trader said. "I fear that the pension funds will
do no more from now on than liquidity management."
The government will cancel the government securities
taxpayers bring back into the state pension system from
mandatory private pension funds and it will gradually sell off
equities and other securities.
The Hungarian stock exchange's <> index fell 2.7 percent
by 1516 GMT, while Prague's <> firmed 0.6 percent and
Poland's stock market <> gained 0.2 percent. Hungarian oil
group MOL <MOLB.BU> bore the brunt of the slide, falling 4
percent.
"Two sizeable foreign companies started to sell in late
trade, probably from the U.S.," one equity trader said. "It's
possible that some U.S. fund managers think the outlook has
worsened due to the pension changes."
ROMANIA SALE
Dealers said that while Ireland's austerity plans announced
on Wednesday have calmed markets somewhat, worries were growing
about a spillover effect into other highly indebted euro
periphery states such as Portugal or even Spain.
In central Europe, Hungary and Romania's markets have been
regarded as most vulnerable to risk aversion associated with the
euro zone debt crisis.
A Hungarian dealer said the forint remained relatively
resilient and was unlikely to weaken to the 280 technical and
psychological level against the euro as the government's pension
measures would reduce the budget deficit and state debt.
"A fall to 280 would be the extreme scenario, but that would
happen only if the zloty also weakens, the euro falls and the
Swiss franc strengthens," the trader said.
Romania sold 1.3 billion euros worth of 3-year,
euro-denominated government bonds in the domestic market on
Thursday, more than a planned 1 billion euros' worth.
[]
The issue would help repay 1.4 billion euros' worth of
Treasury bills that mature at the end of November.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.69 24.677 -0.05% +6.59%
Polish zloty <EURPLN=> 3.975 3.956 -0.48% +3.25%
Hungarian forint <EURHUF=> 277.18 274.95 -0.8% -2.46%
Croatian kuna <EURHRK=> 7.416 7.413 -0.04% -1.44%
Romanian leu <EURRON=> 4.298 4.30 5 +0.16% -1.41%
Serbian dinar <EURRSD=> 106.9 106.62 -0.26% -10.31%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 63bps over bmk*
7-yr T-bond CZ7YT=RR +15 basis points to +85bps over bmk*
10-yr T-bond CZ9YT=RR +7 basis points to +95bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +14 basis points to +623bps over bmk*
5-yr T-bond HU5YT=RR +15 basis points to +594bps over bmk*
10-yr T-bond HU10YT=RR +18 basis points to +520bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1553 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 and Susan Fenton)
