April 13, 2017 / 1:32 PM / 8 months ago

CEE MARKETS-Demand surges at debt sales, political risks weighs on currencies

    * Debt auctions draw strong demand, Trump comments on rates
help
    * Polish, Hungarian bond yields near multi-month lows on
Trump
    * Political uncertainties weigh on currencies

 (Recasts with debt auctions)
    By Sandor Peto
    BUDAPEST, April 13 (Reuters) - Government debt auctions in
Budapest, Bucharest and Prague drew robust demand on Thursday
after U.S. President Donald Trump signalled that he wanted
interest rates to stay low.
    Hungarian and Polish government bonds traded near
multi-month lows.
    Czech two-year bonds bucked the trend despite huge
over-subscription at an auction of 115-day Treasury bills.
Yields were bid at minus 0.01 percent, up 7 basis points.
    The government sold 16.3 billion crowns ($649.27
million)worth of the bills at an average yield of -0.5 percent,
well above the original planned maximum 5 billion crowns, with
demand at 19.1 billion crowns.
    One trader said some foreigners who bought short-term Czech
bonds earlier, betting on a surge of the crown, are
rolling those positions over into even shorter bills.
    The central bank a week ago removed its cap on the value of
the crown, which had kept the currency weaker than 27
per euro since 2013.
    The crown traded at 26.721 at 1232 GMT, a shade weaker from
Wednesday and only slightly stronger than the old cap, despite
bets by investors who bought tens of billions of euros worth of
crowns hoping for a surge beyond 26.
    "I would not want to be in (the long-crown) people's skin
right now," one Prague trader said. "One loses nerve, then a
second and a third, and there could be quite a mess."
    Elsewhere, Romania sold a planned 600 million lei worth of
five-year bonds, with the average yield falling to 2.77 percent
from 3 percent in a sale five weeks ago.
    Yields at Hungary's two bond auctions fell below secondary
market levels even though the government sold debt worth 70.8
billion forints ($240.90 million), well above the 45 billion
forint planned.
    The forint, meanwhile, touched one-month lows. Trading at
312.61 against the euro, it was down 0.1 percent.
    Geopolitical risks are also in investors' minds, including
Sunday's Turkish referendum about presidential power and
France's upcoming elections.
    "We are also getting calls from foreigners enquiring about
the demonstrations in Budapest," one dealer said.
    Tens of thousands protested in the past days in the
Hungarian capital against government plans to tighten
legislation over non-governmental organisations and a university
founded by financier George Soros.
    Concern over politics may influence the forint, but the
strong demand for bonds shows limited market impact.
    "It may get worse if there is escalation to a conflict with
the European Union," the trader said.
    
              CEE        SNAPS   AT  1432          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.72  26.70  -0.05  1.07%
                            10     65      %  
 Hungary                 312.6  312.3  -0.07  -1.21
 forint                    100    950      %      %
 Polish                  4.247  4.246  -0.02  3.68%
 zloty                       5      8      %  
 Romanian                4.519  4.517  -0.04  0.34%
 leu                         6      8      %  
 Croatian                7.426  7.438   +0.1  1.74%
 kuna                        0      5     7%  
 Serbian                 123.5  123.6   +0.1  -0.16
 dinar                     500    950     2%      %
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  974.5  983.6  -0.93   +5.7
                             0      1      %     4%
 Budapest                32516  32409   +0.3   +1.6
                           .16    .94     3%     0%
 Warsaw                  2220.  2214.   +0.2   +13.
                            18     06     8%    98%
 Bucharest               8239.  8217.   +0.2   +16.
                            59     83     6%    30%
 Ljubljana               778.4  779.4  -0.13   +8.4
                             2      1      %     8%
 Zagreb                  1901.  1903.  -0.10  -4.69
                            35     28      %      %
 Belgrade     <.BELEX15  732.0  734.4  -0.33   +2.0
              >              9      8      %     5%
 Sofia                   655.6  656.5  -0.14   +11.
                             5      9      %    80%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.01  0.071   +085   +9bp
              >              3           bps      s
   5-year     <CZ5YT=RR  0.277  0.019   +080   +3bp
              >                          bps      s
   10-year    <CZ10YT=R  1.023  -0.05   +084  -4bps
              R>                    1    bps  
 Poland                                            
   2-year     <PL2YT=RR  2.002  -0.00   +286   +1bp
              >                     7    bps      s
   5-year     <PL5YT=RR   2.87  -0.01   +339   +0bp
              >                     9    bps      s
   10-year    <PL10YT=R  3.393  -0.04   +321  -3bps
              R>                    7    bps  
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <    0.3   0.32    0.4      0
              PRIBOR=>                        
 Hungary              <    0.2   0.27   0.33   0.16
              BUBOR=>                         
 Poland               <   1.77  1.785  1.795   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 ($1 = 25.1050 Czech crowns)
($1 = 293.9000 forints)

 (Aditional reporting by Jason Hovet and Robert Muller in
Prague, editing by Larry King)
  
 
 

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