* Romania sells less than a third of a planned 6-mo tender
* Govt reshuffle highlights Romania political risks
* Poland cbank chief sees still in wait-and-see more
* Czech set to place 10-yr euro bond
(Updates with Romania debt tender)
By Marton Dunai and Marius Zaharia
BUDAPEST/BUCHAREST, Sept 6 (Reuters) - An unstable political
situation has increased pressure on Romanian yields, crippling a
debt tender on Monday, while the Czech crown was hit by weak
retail and output figures.
Romania proved it cannot rely on short-term issues to meet
its funding needs, selling less than a third as much as planned
at one its usually smooth six-month tenders, signalling its
four-month old strategy to cap yields at 7 percent may have to
be scrapped soon. []
Analysts said a government reshuffle last week highlighted
tensions within the main ruling party and increased worries
about its ability to resist a likely no-confidence vote against
it later this year. [] [].
The shaky situation of the coalition government may force
the ministry to concede and start paying higher yields at
tenders in the following weeks, analysts said.
"It seems that the reshuffle and other factors had increased
pressure on yields," said Vlad Muscalu, economist at ING Bank in
Bucharest. "So it seems that what we have been saying will
happen (losing the yield cap) at some point, may happen sooner
than we have thought."
At 1430 GMT, the leu <EURRON=> fell 0.2 percent on the day,
hovering around two-month lows hit on Friday.
In Czech Republic, where the government is trusted by
markets to do the needed fiscal cuts, yields have been trading
at record lows.
The Czech Republic has tightened guidance by five bps on a
2021 euro-denominated bond to mid-swaps +110/115 bps and orders
already total more than 2 billion euros, according to Thomson
Reuters service IFR. []
"The pricing is fairly cheap and the interest of investors
seems high, which these days is an important thing," said Robert
Weiner, fixed income dealer at UniCredit.
POOR CZECH DATA
The crown <EURCZK=> dipped 0.2 percent after retail sales
and output figures came in below forecasts []. The
Polish zloty <EURPLN=> was up a touch, while the battered
Hungarian forint fell 0.4 percent.
"Czech data releases for July output and trade came in
slightly below the market expectations, but I do not see them as
a really negative surprise," Generali analyst Radomir Jac said.
"July faced a negative calendar effect (of two fewer working
days year-on-year) and such a factor simply has an adverse
impact on industrial output, exports or retail sales."
Polish bonds were steady after weekend comments from
National Bank of Poland Governor Marek Belka, who said the bank
remained in a wait-and-see mode regarding rates, and added he
saw no clear sign of inflationary pressures. []
"So far we had had (Belka) down as a moderate hawk,"
Commerzbank wrote in a note. "If he plays down the risks of
inflation that means it will be difficult to obtain a majority
for a rapid rate rise."
Poland's draft 2011 budget approved on Friday, the
government set the budget deficit target at 40.2 billion zlotys,
compared with a 48 billion zloty gap expected for this year.
[]
In Hungary, Prime Minister Viktor Orban reiterated over the
weekend that the country will choose its own path repaying a
heavy debt burden [].
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.706 24.667 -0.16% +6.52%
Polish zloty <EURPLN=> 3.932 3.935 +0.08% +4.37%
Hungarian forint <EURHUF=> 285.06 284.04 -0.36% -5.16%
Croatian kuna <EURHRK=> 7.293 7.284 -0.12% +0.22%
Romanian leu <EURRON=> 4.282 4.274 -0.19% -1.04%
Serbian dinar <EURRSD=> 105.54 105.69 +0.14% -9.15%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +2 basis points to 116bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +94bps over bmk*
10-yr T-bond CZ9YT=RR +2 basis points to +97bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +410bps over bmk*
5-yr T-bond PL5YT=RR +9 basis points to +401bps over bmk*
10-yr T-bond PL10YT=RR +7 basis points to +328bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +626bps over bmk*
5-yr T-bond HU5YT=RR +6 basis points to +591bps over bmk*
10-yr T-bond HU10YT=RR +7 basis points to +500bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1630 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Marton Dunai and
Marius Zaharia; Editing by Ron Askew)
