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CEE MARKETS-Debt sales draw robust demand, Hungarian yields set record lows
November 23, 2017 / 3:11 PM / 19 days ago

CEE MARKETS-Debt sales draw robust demand, Hungarian yields set record lows

    * Demand heavy at auctions in Budapest, Prague, Warsaw
    * Long-term Hungarian bonds trade at record low yields
    * Central bank measures to curb yields weigh on forint

 (Recasts with debt auctions.)
    By Sandor Peto
    BUDAPEST, Nov 23 (Reuters) - Hungarian long-term government
bonds traded at record low yields on Thursday after their first
auction since the central bank announced measures to push yields
lower. Debt auctions in Prague and Warsaw also drew robust
demand.
    Hungary sold 3-, 5- and 10-year bonds worth 99 billion
forints at its own auctions, 80 percent more than planned
.
    The longer bonds were sold at record low yields, and
secondary market trading settled at the same levels after the
primary sale: the 5-year benchmark at 1.04 percent and the
10-year paper at 2.04 percent.
    The sale came two days after Hungary's central bank, one of
the most dovish in the world, announced that it would launch a
big interest rate swap programme from January to push long-term
yield lower, and also a mortgage note buying scheme.
    The comments helped drive Hungarian bond yields down after a
steep decline since March. 
    Some market participants expect the NBH's loose policy to
weaken the forint to one-year lows past 315 against
the euro later this year.
    The strong bond sale helped the currency reverse an early
weakening. At 1421 GMT, it traded at 312.62, a touch firmer from
Wednesday.
    Polish bond yields, which are well above Hungarian levels
also fell, after an auction in Warsaw. Following
the auction, Polish 10-year debt traded at a yield of 3.33
percent, down 7 basis points. 
    Analysts said demand got a boost from Wednesday's Federal
Reserve minutes, which suggested that U.S. interest rates may
rise more slowly than expected.
    Demand at an auction of Czech 19-week Treasury bills also
jumped, driven by banks trying to keep cash off their books at
the end of the year, to reduce a charge they have to pay to a
national resolution fund.
    The crown extended the gains reached in the past
weeks as expectations grew that the Czech central bank would
further raise interest rates. The currency set a 4 1/2-year high
against the euro, trading at 25.431, up 0.2 percent.
    The leu eased, hovering near record lows. The
Romanian government rejected all bids at a one-year Treasury
bill auctions.
    Surging yields have caused several auctions to fail since
October, along with a decline by leu amid corruption scandals
and a rise in inflation.     
    
               CEE MARKETS  SNAPSH   AT  1521 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.431  25.487   +0.22   6.20%
                                 0       5       %  
 Hungary                    312.62  312.75   +0.04  -1.22%
 forint                         00      00       %  
 Polish zloty               4.2102  4.2051  -0.12%   4.60%
 Romanian leu               4.6530  4.6515  -0.03%  -2.54%
 Croatian                   7.5730  7.5775   +0.06  -0.24%
 kuna                                            %  
 Serbian                    119.35  119.19  -0.13%   3.35%
 dinar                          00      00          
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1045.2  1046.6  -0.13%   +13.4
                                 6       1              2%
 Budapest                   39965.  40131.  -0.41%   +24.8
                                27      37              8%
 Warsaw                     2512.9  2489.5   +0.94   +29.0
                                 2       0       %      1%
 Bucharest                  7784.1  7772.9   +0.14   +9.87
                                 9       6       %       %
 Ljubljana                  781.69  786.11  -0.56%   +8.93
                                                         %
 Zagreb                     1860.3  1857.6   +0.14  -6.74%
                                 0       5       %  
 Belgrade                   736.19  731.78   +0.60   +2.62
                                                 %       %
 Sofia                      667.71  669.38  -0.25%   +13.8
                                                        6%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.473   0.093   +116b   +8bps
                                                ps  
   5-year                    1.024   0.141   +135b   +14bp
                                                ps       s
   10-year                   1.757  -0.025   +141b   -2bps
                                                ps  
 Poland                                                   
   2-year                    1.551  -0.004   +224b   -1bps
                                                ps  
   5-year                    2.565  -0.038   +289b   -4bps
                                                ps  
   10-year                    3.34  -0.049   +299b   -5bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    1.03    1.21    1.34       0
               IBOR=>                               
 Hungary               <BU    0.03    0.06     0.1    0.03
               BOR=>                                
 Poland                <WI   1.785    1.83    1.92    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
        

 (Additional reporting by Jason Hovet in Prague and Bartosz
Chmielewski in Warsaw, editing by Larry King)
  
 
 

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