March 4, 2019 / 11:07 AM / 19 days ago

CEE MARKETS-Romanian assets gain as S&P delays outlook review

    * S&P delays publishing Romania rating outlook in unusual
decision
    * Leu near four-week highs, Romanian stocks outperform
region
    * Zloty gains beyond 4.3/euro for first time in weeks
    * Polish central bank meeting seen assessing public spending
plan

    By Sandor Peto
    BUDAPEST, March 4 (Reuters) - Romanian assets gained on
Monday after an unusual decision by Standard & Poor's not to
deliver a rating outlook, raising hopes for changes in a
controversial bank tax.
    S&P affirmed Romania's 'BBB-/A-3' ratings on Friday.
 But instead of changing its outlook to negative
from stable, as some had expected, the agency delayed its
decision for two weeks, at the request of the government.
    That fuelled hopes for changes in the bank tax. Finance
Ministry Eugen Teodorovici said on Wednesday the tax might
exempt several financial assets.
    New taxes imposed this year are painful to banks and, being
linked to the ROBOR interbank rates, complicate
monetary policy.
    Romania could escape a downgrade of its rating outlook if it
disconnects the tax from ROBOR and exempts government bond
holdings from the tax, Raiffeisen analyst Stephan Imre said in a
note.
    The yield on 10-year Romanian government bonds
was bid lower by 10 basis points at 4.88 percent, after a jump
on Friday ahead of the S&P rating review.
    The yield remains well above Poland's 10-year bond yield,
which dropped by 2 basis points to 2.8725 percent.
    "We see nominal yield levels to remain high in Romania in
the absence of more policy clarity," Erste analysts said in a
note.
    The leu led moderate gains by Central European 
currencies, approaching four-week highs beyond 4.732 versus the
euro. It traded at 4.739 at 0955 GMT, up 0.1 percent.
    Bucharest's main stock index outperformed regional
peers, rising 1.25 percent. Listed banks -- Banca Transilvania
 and BRD Groupe Societe Generale -- gained
more than 3 percent.
    Warsaw stocks were steady, while the zloty
 gained about 0.1 percent, to trade at 4.299 versus the
euro. It broke 4.3 for the first time since early February. 
    Data showing low inflation and slowing growth knocked the
zloty to its lowest in more than three months last month, at
4.3455 last month from 18-month highs set at 4.2555 on Jan. 31.
    It started to recover last week after the ruling nationalist
Law and Justice party pledged to boost public spending and the
European Commission said the Polish economy was doing well.

    The Polish central bank will hold its first meeting on
Wednesday where it can look at the fiscal plan. 
    "Monetary Policy Council meeting ... shouldn't bring any
change ... especially since the possibility of interest rate
cuts vanished after last week's announcement of government
fiscal easing," Millennium Bank said in a note.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1055 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6260   25.6260    +0.00%    +0.32%
 crown      >                                       
 Hungary    <EURHUF=  316.0900  316.2400    +0.05%    +1.58%
 forint     >                                       
 Polish     <EURPLN=    4.2990    4.3045    +0.13%    -0.22%
 zloty      >                                       
 Romanian   <EURRON=    4.7390    4.7455    +0.14%    -1.79%
 leu        >                                       
 Croatian   <EURHRK=    7.4300    7.4275    -0.03%    -0.27%
 kuna       >                                       
 Serbian    <EURRSD=  117.8600  118.0500    +0.16%    +0.37%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1080.51  1075.740    +0.44%    +9.52%
                                       0            
 Budapest             40344.19  40170.66    +0.43%    +3.08%
 Warsaw                2323.33   2333.11    -0.42%    +2.05%
 Bucharest             7759.27   7663.49    +1.25%    +5.09%
 Ljubljana  <.SBITOP    848.82    847.62    +0.14%    +5.54%
            >                                       
 Zagreb                1784.77   1792.79    -0.45%    +2.06%
 Belgrade   <.BELEX1    689.96    691.54    -0.23%    -9.42%
            5>                                      
 Sofia                  585.06    585.06    +0.00%    -1.58%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.8480    0.0560   +236bps     +4bps
            R>                                      
   5-year   <CZ5YT=R    1.8150    0.0100   +212bps     +1bps
            R>                                      
   10-year  <CZ10YT=    1.9060    0.0000   +172bps     +1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6440   -0.1110   +216bps    -13bps
            R>                                      
   5-year   <PL5YT=R    2.3160   -0.0090   +262bps     -1bps
            R>                                      
   10-year  <PL10YT=    2.9560   -0.0160   +277bps     -1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.25      2.32      2.32      2.03
            <PRIBOR=                                
            >                                       
 Hungary                  0.44      0.69      0.91      0.00
                                                    
 Poland                   1.75      1.76      1.76      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Reporting by Sandor Peto, editing by Larry King)
  
 
 
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