Monday, January 18, 2016

S&P punishes the zloty by sovereign score downgrade


Friday was a really dangerous day for the zloty. Along with prevailing poor sentiment for rising markets and worries regarding upcoming private modifications within the MPC, the Polish foreign money suffered two extra blows: conversion proposal for CHF mortgages and a sovereign score downgrade.


Relating to a draft invoice that envisaging help to FX mortgage debtors home banks can be pressured to return the distinction between complete reimbursement value within the PLN and in overseas foreign money (just like the CHF) to the debtors by decreasing precept repayments. The debtors must be entitled to transform their FX mortgages into zloty denominated mortgages at a person price that ought to mirror the corresponding PLN calculated has remained open. However, tough estimates point out losses for home banks amounting as much as PLN 50 excessive or greater than 2 % of GDP. In our view, although, such a nasty state of affairs needn’t materialize.


Much more importantly, the S&P downgraded Poland´s lengthy to BBB+ from A independence losses some key establishments (the Constitutional Courtroom, the NBP) suffered as a consequence of numerous legislative measures handed because the parliamentary election in October 2015. Apparently, the Fitch confirmed their A category whereas Moody`s, score Poland one notch above Fitch, have additionally confirmed secure outlook for its A2 score software. All in all, we are likely to see the newest S&P and doubtless stained with political bias. We consider Polish macro fundamentals extra favourably; therefore contemplate the newest EUR/PLN shift as overshooting and see lengthy PLN positions value accumulating.






















Currencies% chng
EUR/CZK26.99-Zero.1
EUR/HUF315.2Zero.2
EUR/PLNfour.481.9
EUR/USD1.09Zero.5
EUR/CHF1.09Zero.2

















FRA 3×6%bps chng
CZKZero.271
HUF1.33Zero
PLN1.512
EUR-Zero.19-1

















GB%bps chng
Czech Rep. 10YZero.71-1
Hungary 10Ythree.31four
Poland 10Ythree.007
Slovakia 10YZero.846

















CDS 5Y%bps chng
Czech Rep.50Zero
Hungary1672
Poland83Zero
Slovakia50Zero



S&P punishes the zloty by sovereign score downgrade

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