News
CZ: Neutral – Govt sold CZK 6.7bn of CZGB 3.85/21: bid/cover 2.3, avg yield 3.864% (p2)
LT: Negative – Govt nationalizes Snoras Bank – the country’s fifth largest bank (p2)
TK: Negative – Oct Consumer Confidence Index dropped to 89.7 (p2)
Today’s Events
BG: Oct Unemployment / HU: HUF 15bn 2014/D, HUF 15bn 2017/A and HUF 8bn 2022/A GB auctions / RO: RON 0.3bn 2014 GB auction / RU: Labor market statistics, International reserves as of / SRB: RSD 4bn 6M T-Bill auction / UA: 3Y, 5Y and 10Y USD-linked GB auctions
EEMEA Markets
Hungary: the AKK will auction HUF38bn HGBs today. The auction will be a key sentiment test following several unsuccessful t/bill auctions in the last few weeks. We note that HUF240bn t-bill matured yesterday which might have contributed to the better than expected 3m t-bill auctions on Tuesday. In terms of today’s auction papers we see the 17/A (ASW 120bp) and the 22/A (ASW 120bp) papers relatively cheaper than the shorter 14/D (ASW 108bp). Secondary market yields are currently 8.4%, 8.70% and 8.80% respectively. We remain negative on Hungarian assets from a multi week perspective but following the recent sharp sell-off both in HGBs and HUF we see some scope for a near term short squeeze. For investors who currently hold significant U/W position in HGBs we think buying EUR/HUF put options look an attractive hedge.
Romania: today the MinFin will auction RON300mn 2014 ROMGB. Due to ongoing liquidity squeeze in Romanian short term money market we expect muted demand. The auction yield should come around 7.45%. We are also looking for indications regarding the forthcoming Eurobond issuance after the roadshow was concluded yesterday. In case it is a 10y USD denominated bond we would expect spreads around 450bp.
Lithuania: According to a statement from the Bank of Lithuania, it has appointed a provisional administration for the bank Snoras yesterday. The bank holds approx. 10.0% of the total banking system assets, according to our estimates (based on local accounting standards, unconsolidated figures) and is the fifth largest bank in the country. The bank’s operations are temporarily suspended until next Monday. Later in the day, the Government at an extraordinary meeting decided to nationalise the bank. According to the statement of a Central bank’s representative, the local press reports, there was discovered that the assets of total value LTL1bn or EUR290mn (mostly securities) were missing in the bank. Lithuanian Eurobonds fell about 100bp following the announcement. Today we are looking for potential announcements from the IMF which is supposed to publish the Article IV conclusions.
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UniCredit Research