News
HU: Positive – Foreign Minister Martonyi says government is ready to change disputed central bank law (p1)
KZ: Mixed – NBK Marchenko says bank will keep 6-8% CPI target band / media reports suggest BTA CEO resigned (p2)
PL: Positive – MinFin issues EUR750mn 5y Eurobond at MS+237bp spread (p1)
RO: Mixed – Nov IP grew 4.3% yoy (0.3% mom) (p2)
Today’s Events
HU: Chief Hungarian negotiator meets IMF, EC meeting (several Hungary-related topics are likely to be on the agenda), Dec NBH MPC minutes / PL: NBP MPC rate announcement (UCCIB, cons: no change) / RO: Dec CPI, Nov net wages / TK: Nov C/A
EEMEA Markets
* Poland taps the Eurobond market: yesterday Poland issued the first sovereign Eurobond from the CEEMEA region this year. The MinFin sold EUR750mn paper (retap of the Poland EUR 17) with a spread of 237bp versus mid swaps. At the time of the announcement the premium was about 35bp versus the EUR curve which has shrunk to about 20/25bp. We estimated that Poland would issue EUR5.8bn Eurobond this year which again makes it the biggest sovereign issuer of the CEEMEA region. In theory both Hungary and Ukraine would need to issue similar amounts but we expect both to receive external assistance. The next in line will likely be Turkey which will probably issue USD denominated papers (we expect around the 10y segment). We estimate the total Turkish 2012 public external borrowing need at around EUR 3.5bn. Turkish credit significantly underperformed YTD we would expect stronger demand if the deal is announced.
* Hungarian newsflow keeps on improving: yesterday the announcement from the Foreign Minister Martonyi that the government is willing to change the disputed central bank law led to a strong rally in Hungarian assets. Relatively hawkish statement from the non-rate setting NBH meeting provided further support for the HUF. Today and tomorrow we are looking for comments from the IMF and EC regarding potential comments about conditionality of the external assistance. We stick to our view that HUF will likely benefit the most as the market is still short in FX. Tomorrow the AKK will auction HGBs (HUF33bn) which will be an important sentiment test.
* Poland – NBP meeting in focus: the NBP MPC will announce its rate decision today. We and the consensus expect unchanged rate at 4.50%. We believe the recent strong growth data as well as core CPI at multi year high do not justify an easing at this stage. We will keep a close eye on any reference regarding the PLN performance. As the curve is pricing about 25bp rate cut over 12M we think risk reward still favours payers. We hence retain our 5y PLN IRS payer as one of our top trade for 2012.
Click here to read the full report: EEMEA Eco Daily 110112