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Bloomberg: Hungary most indebted country, Romania poorest country in EU
Hungary, Romania and Serbia, which turned to bailouts in 2009, are struggling to find buyers for their debt as spending cuts weaken government power and concerns grow about a stalled recovery, Bloomberg writes.
Serbia failed to attract enough bids to cover offers in six out of 25 debt auctions since the start of June, while Romania failed to sell any debt in four auctions since the launch of an austerity program in July and had only partial sales in 10 other auctions. Hungary’s auction last week also came up short.
The three former communist countries rely on a combined 43 billion euros ($55 million) in loans backed by the International Monetary Fund. Hungary, the European Union’s most indebted state, Romania, the bloc’s poorest, and Serbia, which is not an EU member, are trying to bolster their currencies, hold back inflation and raise foreign direct investment as revenue slumps, with little success, analysts said.
“Obviously, the three countries are sharing the same macro problems, which forced them to all find protection under the IMF ‘financial umbrella’,” said Elisabeth Gruie, an emerging markets strategist at BNP Paribas in London. “Their level of refinancing needs is far above that of the rest of the region given budget slippages,” while there remain problems with the “political landscape.”
Romania, which has told investors it won’t pay more in yield than 7 percent, accepted 279 million lei ($84 million) of 182-day Treasury bills yesterday, less than the 1 billion lei it had offered. Serbia and Hungary will test the markets today with three-month Treasury bill offers.
Yields are rising as foreign investors are “fast losing faith,” said Timothy Ash, the head of emerging-market research at Royal Bank of Scotland Group Plc in London. “Hungary still has deep-seated problems, including a high burden of public sector and external debt -- much worse than Romania or Serbia.”
Yields on Serbia’s short-term debt have risen to 10.7 percent from 10.3 percent since early July, Bloomberg data show. Romanian yields have risen from 6.29 percent in late May and the cost of short-term debt in Hungary advanced to 5.47 percent from 5.38 percent in a month.
In contrast, comparable Czech debt yields inched down over the past month to 0.82 percent from 0.84 percent. Poland’s borrowing costs have dropped this month to 4.67 percent from 4.759 percent in early August.
Bucharest Herald
2010. szeptember 08., szerda , 12:25:33
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