* Currencies mixed, on stand-by, Polish data key
* Hungary prices 1 bln euro 5-yr bond, forint gains
By Marius Zaharia
BUCHAREST, July 17 (Reuters) - The Hungarian forint gained
slightly more than its peers on Friday, boosted by a well-bid
eurobond issue and the success of Thursday's domestic debt
auctions.
Other regional currencies were mixed, waiting for industry
data in Poland and more U.S. earnings results before deciding on
which direction to go.
Although worries about the region's vulnerability remain
high, with the recent wage data giving another example of the
economic pain emerging Europe is feeling [],
sentiment was boosted by successful debt auctions in Poland and
Hungary this week.
Hungary's three auctions on Thursday were all oversubscribed
and the country priced a 1 billion euro, 5-year euro bond at 395
basis points over mid-swaps, tighter than the initial guidance
on Friday. []
The deal attracted orders above 1.7 billion euros.
"Firstly, the very strong demand for the HGBs (Hungarian
bonds) underlines that the local market is potentially very long
cash while the highest yields in the region are attracting
non-resident interest too," UniCredit said in a note.
"Secondly, the successful eurobond issuance which is the
first from a country in CEE having an IMF program shows that
international markets are not any more closed for sovereign
issuers."
However, fiscal troubles in the region mean that higher
demand will likely be met be higher supply as well, it said.
By 0914 GMT, the forint <EURHUF=> was 0.4 percent stronger,
while the Polish zloty <EURPLN=> had firmed by 0.2 percent. The
Czech crown <EURCZK=> was flat, while the Romanian leu <EURRON=>
had weakened by 0.2 percent.
"Newsflow from outside is quite ok, banks in the U.S. start
to make profit ... but on the other hand it is still too early
to say it's all over," one dealer in Bucharest said.
"This region is still seen quite vulnerable, so until things
become clearer it is on stand-by."
AWAITING POLISH DATA
Poland is expected to release June industrial output and
producer prices at 1200 GMT and dealers said data will be a test
for the whole region.
"If those come out badly, people will book this week's
profit," another dealer said.
Central and eastern Europe is underperforming other emerging
markets when risk appetite picks up, mostly because of worries
over currency devaluations in the Baltics and over a frail
banking sector burdened with foreign debt.
Also, help from the International Monetary Fund to countries
such as Latvia, Hungary and Romania came along with requirements
for tight fiscal policies which will weigh on a potential
recovery of those economies.
Hungarian government bond yields edged about 5 basis points
higher on Friday morning in what traders said was a natural
adjustment after Thursday's gains. Polish bonds were steady.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.933 25.929 -0.02% +3.16%
Polish zloty <EURPLN=> 4.315 4.325 +0.23% -4.63%
Hungarian forint <EURHUF=> 273.43 274.44 +0.37% -3.61%
Croatian kuna <EURHRK=> 7.328 7.33 +0.03% +0.5%
Romanian leu <EURRON=> 4.241 4.232 -0.21% -5.34%
Serbian dinar <EURRSD=> 92.837 92.92 +0.09% -3.62%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -14 basis points to 119bps over bmk*
4-yr T-bond CZ4YT=RR +5 basis points to +167bps over bmk*
8-yr T-bond CZ8YT=RR +8 basis points to +307bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +315bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +287bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +739bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +660bps over bmk*
10-yr T-bond HU10YT=RR +4 basis points to +537bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1214 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;
editing by Toby Chopra)
