The initial reaction of the international markets after the recent election result in Greece was positive, as Greece moves away from the worst case scenario of leaving the Euro zone, which had already been assessed.
The Monetary Council of Hungary's central bank (NBH) has voted on April 24th to leave the key policy rate unchanged at 7.00%. Thus, it will be the fourth consecutive month when the indicator's value is kept at this level, asthe high volatility of risk perceptions and recent trends in underlying inflation continue to warrant a cautious policy stance. One of the main reasons of concern for the MC's members is the possible inflationary trend generated by the measures recently announced by the government with the Szell Kalman Plan 2.0.
Slovenia plans an EUR 1.5 billion sovereign bond to part-finance its budget deficit and make a second issue this year, if market conditions are favourable, the country's finance minister said on April 6th, quoted by Reuters.
The Polish Monetary Policy Council decided on April 4th to keep the NBP interest rates unchanged, namely: reference rate at 4.50% on an annual basis; lombard rate at 6.00% on an annual basis; deposit rate at 3.00% on an annual basis; rediscount rate at 4.75% on an annual basis.
The annual inflation rate fell to 2.4 percent in March 2012, from the 2.59 percent level in February 2012, thus recording a new historic low of the last 23 years, according to data released by the National Statistics Institute (INS) on April 10th.
Talking at a conference on central European economic policy in Prague, the governors of the Polish and the Czech central banks voiced differing views Friday, March 16th, on their countries' aspirations towards joining the euro, writes The Wall Street Journal. While Poland seems to maintain its commitment to joining the Euro-zone, although envisaging further political difficulties, Czech Republic shows a reluctant position and refuses to adopt a firm timeframe for the Euro adoption.
In its second survey of the Chief Financial Officers (CFOs) of Russian banks, the views of 80 CFOs reveals broadly credit-positive expectations, says Moody's Investors Service in a new Special Comment published on March 27th. "Bankers are cautiously optimistic about the Russian economy and expect asset quality, profitability and capitalisation to remain stable. Although we share CFOs expectations on certain topics, the ongoing euro area crisis has the potential to exacerbate volatility in banks' performance and affect Russian GDP growth dynamics," explains Eugene Tarzimanov, a Moody's Vice President - Senior Analyst and author of the report.
The outlook on the Slovakian banking system has been changed to negative from stable, caused by the downside risks to economic growth and asset quality within the system, says Moody's Investors Service in a new Banking System Outlook published on March 27th. Moody's expects the Slovakian operating environment will weaken over the outlook period, amidst the broader European Union economic slowdown. This will exert pressure on asset quality, which, in turn, will dampen the banks' profitability. These factors are balanced against expectations of continued good system-wide liquidity and adequate capitalisation.
Euro area finance ministers meeting this week need to boost the firepower of the European stability funds to at least one trillion euros, OECD Secretary-General Angel Gurria said on March 27th. The current level of commitment to the rescue funds is not enough to restore market confidence, he said. A credible financial firewall will provide governments with the breathing space they need to focus crucially on revitalising Europe's economic growth and competitiveness.
ECOFIN adopted Tuesday, March 13th, a decision suspending EUR 495.2 million in scheduled commitments for Hungary under the EU's cohesion fund, taking effect as of 1 January 2013. It also issued a recommendation1 under the EU's excessive deficit procedure, setting 2012 as the target year for correction of Hungary's deficit.
The OECD report, released on Tuesday, March13th, in Budapest, shows that the fragile and highly-indebted Hungarian economy has been hard hit by the global slowdown and heightened financial market stress. It points out that controversial domestic measures have added to the uncertainty that is undermining business, household and market confidence. According to the OECD's latest Economic Survey of Hungary, swift action is needed to stabilise the Hungarian economy and put growth on a sound footing for a durable recovery.
Moody's Investors Service has assigned on March 12, a Prime-1 short-term debt rating to the government of Poland. The government's existing long-term debt rating is A2 and carries a stable outlook.
Fitch Ratings has affirmed Poland's Long-term foreign currency Issuer Default Rating (IDR) at 'A-', and its Long-term local currency IDR at 'A'. The Outlook on both ratings is Stable. Fitch has simultaneously affirmed Poland's Short-term rating of 'F2' and Country Ceiling of 'AA-'.
The central governments of the larger Central and Eastern European (CEE) countries will need to borrow EUR 94 billion in 2012 to finance deficits and roll over existing debt, equivalent to an estimated 10% of their combined GDP, forecasts FITCH in a recent report published by the agency. This puts CEE-7 countries (Croatia, Czech Republic, Hungary, Poland, Romania, Slovakia, Slovenia) on a par with their peers in the eurozone's healthy core.
In the CEE and CIS regions, Republic of Moldova and Ukraine's political risk lowered, while Azerbaijan, Belarus, Croatia are bearing a higher political risk as compared to 2011, according the 2012 Aon Political Risk Map. Although EU and OECD member states were not rated in the 2012 edition of the map, Romania and Bulgaria were still taken into consideration and assigned a Low-Risk rate.
Polish T-bonds offer the best yields weighted by risk in Europe, according to a report published by Bloomberg agency.
Hungary's Government Debt Management Agency (AKK) has received HUF 62.2 billion worth of bids from primary dealers on a HUF 43 bn lot of bonds and in response to the muted demand it sold only HUF 40 bn worth of debt at auctions on Thursday, February 9th. The average yields were set close to yesterday's benchmark fixings, while they were considerably below the average yields at the previous bond auctions a fortnight ago thanks to the marked drop in yields during this period.
Although Poland is one of the fastest growing economies in Europe, the Warsaw Stock Exchange and the zloty have felt tremors after almost every shock in the global or European economy. The main reason is that Poland is seen as an emerging market and lumped in together with other, less healthy economies in the region, writes The Warsaw Voice.
Standard & Poor's Ratings Services said on January 30th that it placed its 'BBB+' long-term counterparty credit and insurer financial strength ratings on Poland-based non-life insurer Towarzystwo Ubezpieczen i Reasekuracji WARTA S.A. (WARTA) on CreditWatch with positive implications.
"Betting the future on rapid-growth markets simply because they have the right economic and demographic conditions is not enough" says Ernst&Young in its most recent report "The world is bumpy: globalization and new strategies for growth".