October 11, 2016 / 8:56 AM / a year ago

CEE MARKETS-Leu off 3-month lows, Swiss franc mortgages bill watched

* Committees soften Romania's mortgages conversion bill
    * Leu rebounds, but investors watch parliament vote on bill
    * Zagreb stocks hit 3-and-1/2-year high

    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, Oct 11 (Reuters) - The Romanian leu led
a firming of Central European currencies on Tuesday after
parliament committees made a bill on the conversion of Swiss
franc mortgages less painful to banks.
     The franc's surge in the past years has boosted
repayments on Swiss franc loans, leading to many Romanian
borrowers defaulting.
     Legislative efforts in Central European states, including
Hungary and Poland, to convert similar loans have caused jitters
in local markets in the past years.
     Romania's bill aims to convert the loans into leu at
historical rates. 
     The budget and finance committees in parliament's lower
house decided on Monday that the rule should be applied only for
loans on which repayments exceed half of borrowers' monthly
income. That solution would be less painful to banks than a
previous version which would have converted all loans.
    The leu, after rebounding from 3-month lows
against the euro on Monday, firmed by 0.1 percent to 4.4905 by
0808 GMT on Tuesday.
    But parliament may still ignore the committees' proposal
when it votes on the bill, probably after 1230 GMT.
    "Part of the leu firming is a natural correction after the
last few days, and part of it is that idea of converting only
some of the Swiss franc loans," said one trader with a foreign
bank in Bucharest. 
    "Let's see what happens during the debate and vote."
    The leu shrugged off a dip in annual inflation to -0.6
percent in September from -0.2 percent in August.
    Romania's 10-year bonds traded steady around a yield of 2.99
percent, 10 basis points below better-rated Poland's
corresponding bonds and 2 basis points above Hungary.
    An overly consumer-friendly conversion bill could lead to a
rise in Romanian yields, said Imre Stephan, analyst of
Raiffeisen in a note.
    Further risk is that "additional measures will be decided in
pre-election spending which would add to the already elevated
pressure on this, but mainly next year's budget deficit target",
he added. Romania will hold elections in December.    
    Inflation is anaemic across the region even though there
have been some signs that it has started to rise.
    Consumer prices rose by 0.6 percent in Hungary in annual
terms in September according to figures published on Tuesday.
    The forint eased a shade to 303.95 versus the
euro, but stayed near 17-month highs set on Friday. 
    Regional bonds and equities were mixed and rangebound.
    The main index of the Zagreb bourse firmed 0.2
percent, touching a 3-and-1/2-year high.
    Croatia's president named Andrej Plenkovic, head of the
conservative HDZ party, as prime minister-designate on Monday,
after tough coalition talks. 
    
           CEE      SNAP   AT  1008       
           MARKETS  SHOT  CET         
                    CURRENCIES            
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                    bid   clos  chan  in
                          e     ge    2016
 Czech     <EURCZK  27.0  27.0   +0.  -0.0
 crown     =>        210   210   00%    9%
 Hungary   <EURHUF  303.  303.  -0.0  3.52
 forint    =>       9500  8100    5%     %
 Polish    <EURPLN  4.27  4.27   +0.  -0.2
 zloty     =>         00    41   09%    8%
 Romanian  <EURRON  4.49  4.49   +0.  0.63
 leu       =>         05    55   11%     %
 Croatian  <EURHRK  7.50  7.50   +0.  1.80
 kuna      =>         40    65   03%     %
 Serbian   <EURRSD  123.  123.   +0.  -1.2
 dinar     =>       0100  1500   11%    5%
 Note:     calcula  prev  clos  1800      
 daily     ted      ious  e at  CET   
 change    from                       
                    STOC                  
                    KS                
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                          clos  chan  in
                          e     ge    2016
 Prague             890.  891.  -0.0  -6.9
                      39    00    7%    0%
 Budapest           2854  2857  -0.1   +19
                    0.96  0.02    0%  .32%
 Warsaw    <.WIG20  1764  1765  -0.1  -5.1
           >         .25   .95    0%    0%
 Buchares           6914  6911   +0.  -1.2
 t                   .41   .52   04%    8%
 Ljubljan  <.SBITO  728.  732.  -0.4   +4.
 a         P>         89    43    8%   70%
 Zagreb    <.CRBEX  2001  1997   +0.   +18
           >         .53   .46   20%  .46%
 Belgrade  <.BELEX  635.  642.  -1.0  -1.3
           15>        50    27    5%    4%
 Sofia     <.SOFIX  508.  507.   +0.   +10
           >          19    66   10%  .26%
                    BOND                  
                    S                 
                    Yiel  Yiel  Spre  Dail
                    d     d     ad    y
                    (bid  chan  vs    chan
                    )     ge    Bund  ge
                                      in
 Czech                                spre
 Republic                             ad
   2-year  <CZ2YT=  -0.5  -0.0   +00   +0b
           RR>         8    07  9bps    ps
   5-year  <CZ5YT=  -0.1  -0.0   +03   +0b
           RR>        62    02  2bps    ps
           <CZ10YT  0.33     0   +02   +1b
 10-year   =RR>        9        8bps    ps
 Poland                                   
   2-year  <PL2YT=  1.79  0.00   +24   +1b
           RR>         4     8  6bps    ps
   5-year  <PL5YT=  2.50  0.01   +29   +2b
           RR>         5     8  9bps    ps
           <PL10YT  3.09  0.01   +30   +2b
 10-year   =RR>        3     2  4bps    ps
           FORWARD  RATE  AGREEMENT       
                    3x6   6x9   9x12  3M
                                      inte
                                      rban
                                      k
 Czech     <CZKFRA  0.28  0.24  0.22     0
 Rep       ><PRIBO                    
           R=>                        
 Hungary   <HUFFRA  0.76  0.75  0.76  0.87
           ><BUBOR                    
           =>                         
 Poland    <PLNFRA  1.73  1.73  1.73  1.72
           ><WIBOR     5     5     5  
           =>                         
 Note:     are for                        
 FRA       ask                        
 quotes    prices                     
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 (Reporting by Sandor Peto; Editing by Alison Williams)

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