October 25, 2018 / 3:25 PM / 2 months ago

CEE MARKETS-Bond auctions in Hungary, Romania draw good demand

    * Hungary and Romania's govt bond auctions draw strong
demand
    * Some yields rise slightly after unchanged ECB guidance
    * OMV unit pushes Bucharest stock index lower

 (Recasts with results of bond auctions, fall of Romanian
shares)
    By Sandor Peto
    BUDAPEST, Oct 25 (Reuters) - Hungarian bonds firmed slightly
on Thursday as relatively high yields at government debt
auctions in Budapest and Bucharest drew healthy demand.
    Hungary sold bonds worth 88 billion forints ($309 million)
at its auctions, more than the 55 billion forint amount
originally offered.
    After the auction, yields stayed flat in the secondary
market, slightly below Wednesday's levels at about 15 basis
points lower than at an auction two weeks ago, with the 10-year
paper trading at 3.74 percent.
    Earlier this month, a rise in long-term yields made the
Hungarian yield curve the steepest in at least 14 years as a
rise in U.S. yields added to worries that the Hungarian central
bank would lag others in tightening policy.
    The European Central Bank, closely watched by rate setters
and investors in Central Europe, reiterated on Thursday its plan
to wind down its stimulus despite concerns over economic growth
and political tension over Italy's increased budget deficit
target.
    Polish government bond yields edged up 1-2 basis points,
with the 10-year paper trading at 3.19 percent, tracking a
similar rise in German and U.S. yields.
    Hungarian bonds, however, remained well-bid.
    They are supported by liquidity from interest rate payments
on government debt and the expiry of a bond, one Budapest-based
fixed income trader said.
    Bucharest also sold more bonds than planned at an auction.

    The papers, which will expire in March 2022, were sold at an
average yield of 4.62 percent, up from 4.22 percent at a tender
held five weeks ago.  
    The government has sold more bonds than planned at this
month's auctions due to its high funding needs in the last
quarter of the year, Raiffeisen analyst Silvia Rosca said in a
note.
    Bucharest's main stock index continued to retreat
from last week's five-month highs, and fell 1.6 percent.
    Central European shares were mixed after initial losses as
European equities markets including Frankfurt also
rebounded from an early decline.
    The Romanian index, however, was driven lower by a 3.7
percent fall in the shares of OMV Petrom, a unit of
Austrian energy group OMV.
    The parent company said late on Wednesday that it had
postponed an investment decision on its Black Sea exploration
project until next year because the Romanian government had
taken too long to set the framework conditions.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1653 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.8400   25.8550    +0.06%    -1.15%
 crown      >                                       
 Hungary    <EURHUF=  324.0900  323.1100    -0.30%    -4.07%
 forint     >                                       
 Polish     <EURPLN=    4.3069    4.3070    +0.00%    -3.03%
 zloty      >                                       
 Romanian   <EURRON=    4.6635    4.6595    -0.09%    +0.35%
 leu        >                                       
 Croatian   <EURHRK=    7.4320    7.4285    -0.05%    -0.02%
 kuna       >                                       
 Serbian    <EURRSD=  118.4000  118.6300    +0.19%    +0.08%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1052.27  1062.160    -0.93%    -2.40%
                                       0            
 Budapest             36537.40  36452.74    +0.23%    -7.21%
 Warsaw                2143.11   2144.40    -0.06%   -12.92%
 Bucharest             8497.16   8626.14    -1.50%    +9.59%
 Ljubljana  <.SBITOP    807.13    809.95    -0.35%    +0.09%
            >                                       
 Zagreb                1788.18   1782.68    +0.31%    -2.97%
 Belgrade   <.BELEX1    749.52    735.70    +1.88%    -1.35%
            5>                                      
 Sofia                  598.78    600.14    -0.23%   -11.61%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.5610    0.0640   +221bps     +5bps
            R>                                      
   5-year   <CZ5YT=R    1.8690    0.0110   +205bps     +0bps
            R>                                      
   10-year  <CZ10YT=    2.1740    0.0190   +178bps     +1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.5730    0.0320   +222bps     +2bps
            R>                                      
   5-year   <PL5YT=R    2.4550    0.0200   +264bps     +1bps
            R>                                      
   10-year  <PL10YT=    3.2090    0.0320   +281bps     +2bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.06      2.24      2.39      1.78
            <PRIBOR=                                
            >                                       
 Hungary                  0.34      0.60      0.97      0.16
                                                    
 Poland                   1.78      1.81      1.89      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 

($1 = 284.3700 forints)

 (Reporting by Sandor Peto; Editing by Hugh Lawson)
  
 
 
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