CEE MARKETS 2-Slovenian assets rise on bank plan, bucking region

Thu Dec 12, 2013 11:50am EST

* Slovenian asset gains as it says can save banks without
aid
    * Forint tests 8-month lows; investors await fx loan court
ruling

 (Adds closing prices, details)
    By Sandor Peto
    BUDAPEST, Dec 12 (Reuters) - Slovenian assets gained on
Thursday, bucking declines in other Central European markets,
after the country said it could beef up its ailing banking
system without a European Union bailout.
    The Slovenian government said an audit showed that its banks
needed 4.8 billion euros ($6.6 billion) in extra capital to stay
afloat, and it could raise the money by itself. 
    Ten-year government bonds surged, bid at a yield of 5.39
percent -- down 22 basis points from Wednesday, to an
eight-month low. The main index the Ljubljana stock
exchange rose 0.8 percent.
    The region's other equity markets fell, led by a 1.5 percent
drop in Warsaw's main index. Those losses tracked the
declines elsewhere, amid concern the U.S. Federal Reserve will
start to scale back its stimulus measures soon.
    "It is now up to the Slovenian authorities to push forward
with a broader structural reform agenda, including
privatisation, further fiscal consolidation, plus reforms aimed
at boosting competitiveness and laying the foundations for
growth," Standard Bank analyst Timothy Ash said.
    Slovenia's three biggest banks -- all wholly or partly
state-owned -- are expected to need some 3 billion euros in
extra capital from the government. It expects to issue bonds to
finance the plan.
    A recovery by the banks could open the way for other
reforms, including privatisations, to change a model built on
state involvement in the economy.
    In Ljubljana, shares of Telekom Slovenije, rose
1.6 percent. The state plans to sell a majority stake in the
company, and sources said that telecom groups expected to
consider buying the stake included Deutsche Telekom 
and Telenor. 
    White goods maker Gorenje gained 2.2 percent, even
though it failed to find buyers for all the shares on offer in a
planned listing in Warsaw. [ID:nL6N0JR3B7
    
    RISKS ON FORINT
    In currency markets, the forint slipped towards its weakest
level in eight months, before a rate cut expected next week from
the Hungarian central bank and a court ruling on
foreign-currency loans that may increase losses for banks.
    Fixed-income investors looked less worried. They bought all
40 billion forints worth of debt on offer at the Hungarian
government's last bond auction but one this year, at lower
yields than the levels in Wednesday's secondary
market. 
    A Reuters poll of analysts showed that the central bank
could keep cutting its base rate below a previously flagged 3
percent floor, which it is likely to reach next week.
 The bank has already cut the rate by 3.8
percentage points since August last year.
    Inflation at nearly 40-year lows -- partly reflecting
government measures to hold down household utility bills --
cleared the way for the cuts, although some investors fear they
may go too far and undermine the forint.
    "The forint is weakening now due to speculation about next
week's central bank meeting and the (supreme court) Kuria
decision," one Budapest-based currency dealer said.
    Before April elections, the Hungarian government wants to
help households struggling to repay foreign currency loans. The
cabinet has said it would wait for a ruling by Hungary's top
court, the Kuria, on how lower courts should handle lawsuits
brought against banks by foreign currency borrowers. The Kuria
will meet on Monday to discuss the issue.
                      CEE MARKETS SNAPSHOT AT 1635 CET
 ************************** CURRENCIES ************************
                             Latest  Previous   Daily   Change
                             bid     close      change  in 2013
 Czech crown                 27.453    27.426   -0.10%  -8.76%
 Hungarian forint           303.100   302.640   -0.15%  -4.01%
 Polish zloty                 4.184     4.180    -0.10%  -2.62%
 Romanian leu                 4.451     4.450   -0.02%   -0.18%
 Croatian kuna                7.639     7.638    -0.02%  -1.15%
 Serbian dinar              114.720   114.750   +0.03%   -2.11%
 Note: daily change calculated from previous close at 1700 GMT
 **************************** STOCKS **************************
                             Latest  Previous   Daily   Change
                                     close      change  in 2013
 Prague                      966.43    977.97   -1.18%  -6.96%
 Budapest                  18273.52  18433.59    -0.87%  +0.55%
 Warsaw                     2435.42   2470.20    -1.41%  -5.71%
 Bucharest                  6272.47   6261.00  +0.18%  +21.81%
 ***************************** BONDS **************************
                         Yield    Yield    Spread    Daily
                         (bid)    change   vs Bund   change in
 Czech Republic                                      spread
   2-year                0.154   +0.037    -11bps    +1bps
   5-year                0.827    +0.016    -1bps      -2bps
  10-year                2.275   +0.041   +43bps    +2bps
 Hungary
   3-year                4.090     -0.040   +372bps    -6bps
   5-year                4.770     -0.050   +393bps    -9bps
  10-year                5.790    -0.020    +394bps    -4bps
  ******************* FORWARD RATE AGREEMENTS ******************
                              3x6     6x9    9x12  3M interbank
 Czech Rep                    0.365   0.365  0.385   0.38
 Hungary                      2.980   3.070  3.160   3.17
 Poland                       2.680   2.710  2.830   2.65
 Note: FRA quotes are for ask prices
 **************************************************************
 
 (Reporting by Reuters bureaus; Writing by Sandor Peto; Editing
by Catherine Evans, Larry King)
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