February 28, 2019 / 3:08 PM / 23 days ago

CEE MARKETS-Currencies set multi-week highs, Hungary holds robust bond sale

    * Weaker dollar boosts CEE currencies to multi-week highs
    * Hungary's 5- and 10-year bonds draw robust demand at
tender
    * U.S. GDP data curbs CEE fx gains, bond yields rise

 (Adds further currency firming, Q4 GDP data, details of
Hungary's bond sale, leu)
    By Sandor Peto
    BUDAPEST, Feb 28 (Reuters) - Central European currencies set
multi-week highs on Thursday, supported by a weakening of the
dollar and a Hungarian government bond auction that saw solid
demand.
    The forint, the zloty and the Czech
crown traded firmer by more than 0.1 percent against
the euro at 1401 GMT.
    Dollar selling helped them earlier in the session to set
multi-week highs against the euro.
    But they retreated later when U.S. economic data, showing
less than expected slowdown in the fourth quarter, led a to a
rise in U.S. debt yields and the dollar index.

    Fourth-quarter output figures from the region, meanwhile,
confirmed robust annual growth, at 4.9 percent in Poland and 4.1
percent in Slovenia.   
    Even before the U.S. data, Hungary's bi-weekly government
bond tender and top-up auction drew robust demand again and led
to one of the debt agency AKK's biggest ever domestic bond sales
at a total 113 billion forints worth of papers.
    A new series of 3-year bond with 2022 expiry attracted poor
demand, but the 5- and 10-year papers on offer were well
oversubscribed.
    After the U.S. output data, which pushed U.S. debt yields
higher, Hungarian yields also edged up. They rose by a few basis
points, with their curve steepening. 
    The 10-year benchmark paper was fixed at 2.7
percent, rising 3 basis points, just like its Polish peer which
traded at 2.84 percent. 
    Comments by Hungarian Prime Minister Viktor Orban on
Wednesday that all state debt should be held by Hungarians in
the longer term is unlikely to deter foreign investors, one
Budapest-based trader said.
    "We are still analysing what that could mean, together with
the central bank's 300-page proposal (to enhance the economy's
competitiveness)," the trader said.
    Central European stocks were range-bound and mixed, while
MSCI's emerging market share index fell 0.7 percent as
hopes faded for a U.S.-China trade deal and the U.S.-North Korea
summit brought no success.
    Budapest's main index fell 0.5 percent, driven by OTP
Bank shares, which briefly pierced a key resistance
level at 11,850 forints ($42.73) on Wednesday but retreated to
11,710 forints on Thursday.
    The Budapest-based regional bank, which reported a new
acquisition on Thursday, is due to report fourth-quarter
earnings early on Friday.
    The leu bucked the regional firming, trading flat
at 4.7408 against the euro, near 3-week highs reached on
Wednesday after Romanian Finance Minister Eugen Teodorovici
pledged to end uncertainty over a bank tax.
    Banca Transilvania stocks, however, continued to
retreat form 5-week highs, shedding 0.9 percent.   
 
            CEE       SNAPSHOT   AT                         
            MARKETS             1501 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6150   25.6450    +0.12%    +0.36%
 crown      >                                       
 Hungary    <EURHUF=  316.0500  316.5000    +0.14%    +1.59%
 forint     >                                       
 Polish     <EURPLN=    4.3090    4.3155    +0.15%    -0.45%
 zloty      >                                       
 Romanian   <EURRON=    4.7408    4.7400    -0.02%    -1.83%
 leu        >                                       
 Croatian   <EURHRK=    7.4250    7.4295    +0.06%    -0.20%
 kuna       >                                       
 Serbian    <EURRSD=  118.1500  118.1100    -0.03%    +0.13%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1070.88  1067.330    +0.33%    +8.55%
                                       0            
 Budapest             40361.05  40525.28    -0.41%    +3.12%
 Warsaw                2340.77   2333.81    +0.30%    +2.82%
 Bucharest             7637.94   7668.80    -0.40%    +3.44%
 Ljubljana  <.SBITOP    844.01    844.13    -0.01%    +4.94%
            >                                       
 Zagreb                1797.84   1780.86    +0.95%    +2.80%
 Belgrade   <.BELEX1    690.29    684.52    +0.84%    -9.37%
            5>                                      
 Sofia                  587.57    588.41    -0.14%    -1.16%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.8350    0.0480   +238bps     +4bps
            R>                                      
   5-year   <CZ5YT=R    1.7990   -0.0090   +212bps     -2bps
            R>                                      
   10-year  <CZ10YT=    1.9400    0.0270   +177bps     +1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6440    0.0110   +219bps     +1bps
            R>                                      
   5-year   <PL5YT=R    2.3010    0.0140   +262bps     +0bps
            R>                                      
   10-year  <PL10YT=    2.9180    0.0100   +275bps     -1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.26      2.33      2.35      2.02
            <PRIBOR=                                
            >                                       
 Hungary                  0.39      0.60      0.82      0.15
                                                    
 Poland                   1.74      1.74      1.75      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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