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’Hungary — “the Commission remains preoccupied…”
Making an extraordinary story of bailout conditionality even more extraordinary…
The European Commission warned the Hungarian government on Wednesday that it’s ready to go to the European Court of Justice to argue that a new constitution violates EU law.
Hungary for junk?
Gosh, Hungary divides sentiment. (It has also, just as we went to pixels, been stripped of its last investment-grade rating by Fitch.)
Despite our saying not once but twice that Hungary isn’t running out of money in its current crisis,
Hungary — the good, the bad, and the conditionality
Hungary — still in basket-case mode earlier on Thursday… (a snapshot courtesy of Bloomberg):
The government sold 35 billion forint ($140 million) of one-year bills, 10 billion forint less than targeted,
A Magyar martingale
(We mean martingale, the betting strategy, not the quant model!)
Here’s the thing about Hungary, as we see it anyway. If you look at things like the current account, for example, it says “fixable by the IMF”.
Oh Schweizer!
In the aftermath of Wednesday’s unexpected rate cut and liquidity measures from the SNB — all designed to weaken the Swiss franc – there was only one thought on many people’s minds.
Was this indeed the top for the Swiss franc? And if so,
What’s as good as gold, but potentially much more volatile?
The Swiss franc.
It has indeed often been cited as being as good as gold.
But while, on the surface, its similarities with the yellow metal might seem obvious, there is one very important difference to bear in mind.
Central bank SOS
Or, the ECB provides another reason to steer clear of Hungary.
This legal opinion on proposed government changes to the Hungarian central bank (the Magyar Nemzeti Bank, or MNB) looks like a pretty big red alert to us:
Danube flotsam, jetsam, and junk
This is another appeal to readers.
FT Alphaville has looked — and looked hard — for reasons to invest in Hungarian government bonds. We can’t find any. Nor can we quite see why Hungary isn’t among the European sovereigns being mauled by a bond market currently on the prowl.
Sovereigns and pensions, oh dear
Marc Ostwald of Monument Securities has a good riff off of the news that Ireland’s national pension fund will indeed be repurposed to buy Irish government bonds:
While many will argue that this is just more ‘unsound finance’,
When Latvian interbank rates trade through Euribor
Here’s an interesting datapoint unearthed up by BNP Paribas’ emerging markets deak on Monday.
The Latvian interbank rate — Rigibor — is trading through Euribor for the first time in four years…
…
Hungary: willpower, but no way?
FT Alphaville recently noted the tricky situation Hungary could be getting into vis-à-vis strong demand for emerging market bonds like its own, contrasting with its still-questionable credit fundamentals.
Hungary: muddling through the EM tide
Something to bear in mind for all that money flowing into emerging-market bonds lately – there are still some hefty pockets of EM credit risk out there.
Remember Hungary?
Barclays Capital wants you to.
Just what is Hungary up to?
Adventures in debt management, Hungarian change-the-rules edition.
The Hungarian economic ministry made this odd little statement on Tuesday (translated from the Hungarian via Google, so be warned):
Moody’s tires of Hungary, Hungary tires of austerity
Yet more evidence that Hungarian politicians’ careless talk costs, uh, currency — Moody’s placed Hungary’s Baa1-rated government bonds on downgrade review Friday in response to failed IMF talks.
Moody’s reckons a one-notch cut is most likely,
Nomura thinks you should be more bearish on Hungary
Are you worried about Hungary? Why not?
According to analysts Peter Attard Montalto and Olgay Buyukkayali at Nomura, policymakers and investors are a tad complacent about the outlook for the troubled European country.
Chart du jour, emerging Europe FX loans edition
BNP Paribas analysts Vivek Tawadey and Oleksiy Soroka on Monday commented on the standoff between Hungary and the IMF over the small matter of a controversial bank tax, among other things.
As they put it:
CDS report: The Achilles heel
The credit markets appear to be in the midst of a correction, with the major indices all testing recent wide levels. The Markit iTraxx Europe index widened 6.5bp to 142bp today, and has widened about 23bp since last Thursday.
Who’s exposed to Hungary (II)
Hungary, look what you’ve kicked off.
JP Morgan published its analysis of which major European banks are exposed to the eastern European nation earlier this Tuesday. And BNP Paribas’ Ivan Zubo and Olivia Frieser have just followed suit with a rundown of country-by-country exposure to Hungary.
Who’s exposed to Hungary
Hungary may be frantically trying to backpedal its way out of the eyebrow-raising, and market-moving, comments made by some of its politicians and spokespeople last week.
But that hasn’t stopped JP Morgan from publishing a table of which European banks are most exposed to the country.
Cameron shows Hungary how it’s done
Britain’s Prime Minister David Cameron spoke out on the state of the UK economy on Monday morning, and he wasn’t pulling any punches.
The scale of deficit is worse than we thought… economic growth will not fix the problem…
CDS report: Investors discover Hungary
Volatility remains high and the markets, which seemed to be fixated only on the European sovereign situation in the recent past, seem to have many more sources to find volatility. Early in the week,
Not for the forint-hearted…
What happens when government spokespeople start saying things like this:
June 4 (Bloomberg) — Hungary’s economy is in a “grave situation” because the previous government “manipulated” figures and “lied” about the state of the economy,
Hungarian watchdog fines Deutsche Bank on FX swap deals
Fresh on the wire:
RTRS-HUNGARY FIN MKT WATCHDOG FINES DEUTSCHE BANK 90M FORINTS IN RELATIONS WITH CERTAIN FX SWAP DEALS – STATEMENT
Here, meanwhile, follow the key points from the Hungarian language press release via a very rough Google Translation:
Forget Club Med, Hungary might be next
Received wisdom has Portugal, or perhaps Spain, entering the sights of evil sovereign debt speculators once everyone really does get bored with Greece.
But Maya Bhandari of Lombard Street Research reckons we should be looking north of Athens,
On the matter of ECB swap lines…
FT Alphaville featured a guest post at the end of March by BNP Paribas economist Shahin Vallee, who claimed the ECB had agreed secret currency swap lines with Poland and Hungary in October 2009.
When FT Alphaville asked the European central bank about the swap lines,
Where’s the Greek CΣΣ contagion?
FT Alphaville mentioned on Monday that the CDS market did not appear to be implying much of a contagion-effect for Central and Eastern Europe in connection with troubles in the Hellenic Republic.
And having on Thursday noted the widening spread between Greek government bonds and German bunds,
Poland is the new Hungary, says BNP Paribas
Oh dear. Poland may have escaped the financial crisis with a positive GDP year to date, but that will not stop the country’s fiscal situation souring in the year to come, according to BNP Paribas emerging markets analyst Michal Dybula.
Nicht grün shooten in Deutschland
A major European Q1 datafest arrived on Friday. Blasting through all the figures released so far this morning, however, the following news jumps out.
From Bloomberg:
May 15 (Bloomberg) — The German economy contracted more than forecast in the first quarter,
Emerging Europe outlook: still bleak
It’s still not looking good for Emerging Europe according to the latest report on the region from Fitch:
Growth in EE is expected to drop more than in other regions as the characteristics of many countries — such as trade openness,