* Strong demand at Hungary debt sale, Romania auction weaker
* FX rebound on better risk appetite, Spain debt auction
(Updates with Romania auction)
By Marius Zaharia and Jason Hovet
BUCHAREST/PRAGUE, June 17 (Reuters) - The forint jumped on
Thursday after Hungary sold all bonds planned at auction, but
Romania placed less than half its target at the first debt sale
since the government survived a no-confidence vote.
Central European assets got a slight lift from better risk
appetite after a well covered bond auction in Spain eased some
of the debt worries in the euro zone.
Hungary sold all its planned 50 billion forints worth of 3-,
5-, and 10-year bonds at its first such auction since sharp
market falls in early June after government officials compared
Hungary's debt position to that of Greece -- comments which the
cabinet later said were exaggerated. []
But Romania sold less than it wanted on Thursday after the
government narrowly escaped a no-confidence vote on Tuesday over
a package of painful wage and pension cuts, needed to meet terms
of its IMF/EU aid package. []
The two tenders gave mixed signals to markets nervous over a
widening of the euro zone debt crisis to emerging European Union
members, which are slowly struggling to rein in finances while
battling rising yields.
Hungarian yields rose sharply from previous tenders and were
a touch up from Wednesday. Average yields on the Romanian 5-year
bonds sold rose a bit to 6.97 percent, the highest in 2-1/2
months.
"They have sold again at 20-30 basis points below the
secondary market, most likely locals bought them," a Bucharest
dealer said.
The dealer said a firming leu currency could help the
central bank can relax liquidity conditions enough to sell
treasury bills below 7 percent.
"But T-bonds, the way European sovereign markets look, if
they want long-term financing, they will be forced to pay
higher," the dealer added.
At 1016 GMT, the Romanian leu <EURRON=> inched 0.05 percent
lower to 4.234 per euro, near a May 6 low. Hungary's forint
<EURHUF=> rose 0.4 percent from Wednesday's domestic close.
The Polish zloty <EURPLN=> held steady and the Czech crown
<EURCZK=> was a touch weaker, but off morning lows. Stocks were
mostly mixed with Bucharest <> up 2 percent while Warsaw
<> lost 0.6 percent.
WATCHING DEBT RISKS
Romania had rejected bids at several tenders over the past
month or accepted only a small part of the offers as investors
-- worried about political risk, social pressure and legal
challenges to spending cuts -- demanded higher yields.
Finance Minister Sebastian Vladescu told Reuters on Thursday
he was confident the austerity package will overcome legal
challenges at the constitutional court, and he was not worried
over funding this year. []
Central European debt has had to contend with weaker demand
and/or rising yields in the past month, but analysts see little
risk budget financing will freeze up in the region, where
Romania and Hungary hold aid packages.
Polish bonds yields rose up to 8 basis points after
Wednesday's 10-year bond tender showed demand was only a touch
above the amount sold [].
Central bank Monetary Policy Council (MPC) member Elzbieta
Chojna-Duch told Reuters in an interview the country's budget
assumptions are overly optimistic. []
The yield on the Czech benchmark 2019 bond <CZ1002471=>
dropped to a two-week low on Thursday while the spread with a
similar-dated German bond tightened 5 basis points to 155.
Sentiment on Czech debt improved after a 15-year bond tender on
Wednesday saw solid demand but rising yields.[]
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.699 25.665 -0.13% +2.41%
Polish zloty <EURPLN=> 4.071 4.072 +0.02% +0.81%
Hungarian forint <EURHUF=> 278.92 279.97 +0.38% -3.07%
Croatian kuna <EURHRK=> 7.204 7.21 +0.08% +1.46%
Romanian leu <EURRON=> 4.234 4.232 -0.05% +0.08%
Serbian dinar <EURRSD=> 103.82 103.43 -0.38% -7.65%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -12 basis points to 156bps over bmk*
7-yr T-bond CZ7YT=RR +8 basis points to +169bps over bmk*
10-yr T-bond CZ9YT=RR -5 basis points to +157bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1516 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia and
Jason Hovet; Editing by Ruth Pitchford/Toby Chopra)
