News
BY: Positive – Russia agrees to lend Belarus USD 3-3.5bn (p2)
KZ: Mixed – Central Bank Governor Grigory Marchenko says he opposes “short-term speculative bets” on KZT (p2)
LN: Positive – IMF revises GDP growth to 6% and 4.75%, budget deficit to 5.3% and to 2.8% of GDP for 2011 and 2012 respectively (p2)
RU: Positive -FinMin placed an additional RUB50bn in 7Y eurobonds (p2)
UA: Neutral – Central bank Governor Sergiy Arbuzov says USDUAH will remain within 2% range in 2011 (p2)
Today’s Events
LN: 1Q Unemployment / LT: 1Q Unemployment / PL: April Core Inflation, April PPI, April IndOut / RU: Money Supply as of May, 16 / SL: April PPI
EEMEA Markets
Following PM Putin’s visit to Minsk, Russia agreed to lend Belarus USD 3-3.5bn, which is in line with what Russia’s Finance Minister Kudrin promised last week. The package ought to go through the EurAsEc fund, with USD 1bn being distributed per annum. This will not solve the country’s problems, but the authorities ought to seize the opportunity to build on the positive momentum. The financing gap remains open, and we expect to see further news on an IMF package (something that the authorities said they are considering) and further privatisation of assets. Yesterday’s news, confirms what we already knew, so it is only marginally positive now that it has happened. This ought to brighten the mood on the interbank FX market, which has in the past days continued to deteriorate amid a lack of FX supply – with USD/BYR trading at 7900/8300. In the meantime, we have reached our initial T/P target on the Belarus 2015 bonds, which we had set at a price of 95, and are now looking at a price of 98.
The CEE region continues to benefit from international liquidity with recent debt auctions drawing good demand from investors: 1) Russia successfully placed RUB 50bn in a Eurobond top-up, with demand exceeding RUB 60bn, and yields being cut to 7% from 7.125%, reflecting the strong demand for the papers, which we see being related to the bullish RUB bet, but is also related to the relative scarcity of the paper making it all the more attractive. 2) Hungary increased its bond offer after solid demand at the auction, raising HUF67.5bn vs. the originally planned HUF45bn with strong bid/cover ratio’s (+3.0), we continue to favour Hungarian debt, but would be more cautious at this stage of the rally. 3) Romania sold RON500mn of 5Y T-bonds, with the yield falling to 7.34% from 7.38% in the previous auction held on April 14th, as the auction was oversubscribed with bids worth RON1.3bn placed. We continue to like RONGB’s on further yield compression and potential for RON appreciation, as Romania plays catch up with the rest of CEE region.
UniCredit Research