Economy
Hungary CDS at 1.5-month peak
According to Hungary's chief negotiator in the EU/IMF talks, an agreement between the government and international lenders can be taken for granted. Gyula Pleschinger expressed optimism that Hungary's readiness to reach consensus on issues concerning the Central Bank Act will clear the way for official credit talks to open in a few weeks from now.
Such government communication has largely remained ineffective in recent weeks, as markets have been increasingly focusing on tangible results as opposed to statements and promises. As a combined result of Friday's US job market report and a deteriorating outlook for Spain, investor sentiment has become fragile in global markets, pushing Hungary's 5-year CDS to 567 bp, the highest in 1.5 months.
A comparison across the CEE region reveals Hungary's CDS is still the highest among its Central European peers.
Rising CDS is not the only indicator that Hungary is once again considered riskier by investors. The interest rate premium on 5-year Hungarian eurobonds has also risen compared with benchmark German government bonds.
Hungary's deteriorating market perception is likewise reflected by forint-denominated government bonds. The yield curve has moved upwards, with yields on bonds maturing in 5 years or more currently in the range of 9% and over.
Such government communication has largely remained ineffective in recent weeks, as markets have been increasingly focusing on tangible results as opposed to statements and promises. As a combined result of Friday's US job market report and a deteriorating outlook for Spain, investor sentiment has become fragile in global markets, pushing Hungary's 5-year CDS to 567 bp, the highest in 1.5 months.
A comparison across the CEE region reveals Hungary's CDS is still the highest among its Central European peers.
Rising CDS is not the only indicator that Hungary is once again considered riskier by investors. The interest rate premium on 5-year Hungarian eurobonds has also risen compared with benchmark German government bonds.
Hungary's deteriorating market perception is likewise reflected by forint-denominated government bonds. The yield curve has moved upwards, with yields on bonds maturing in 5 years or more currently in the range of 9% and over.
