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Weekly Lists
March 8, 2019 www.intellinews.com I Page 26
bne:Credit
Turkey’s rate-setters hold benchmark as expected but lira weakens
Russia's Domodedovo asks bondholders
to revise Eurobond covenants
Turkey’s central bank kept its benchmark interest rate unchanged at 24% on March 6 as expected. The rate-setters also stated that monetary policy would be tightened further if it became necessary, assuaging investor concern that it could be loosened prematurely in the wake of inflation dropping from a 15-year high.
The one-week repo rate which serves as the regulator’s benchmark was raised 11.25 percentage points last year after the monetary policy committee (MPC) – at that point seen as losing its independ- ence as it came under clear political pressure from the Erdogan administration to provide cheaper money – responded tardily to Turkey’s lira crisis. However, in a Reuters poll taken prior to the latest rates decision all 17 surveyed economists said they expected the present rate to be kept steady.
Moscow’s Domodedovo airport asked the holders of its two five- year Eurobond issues worth $650mn to revise the covenants and increase the maximum allowed net debt leverage ratios to 4x of Ebitda from 3x, the company said on the Irish Stock Exchange on March 4.
"We expect the amendment’s approval and subsequent placement of new Rub-denominated bonds, coupled with negative FCF, may lead to further net leverage growth – possible resulting in negative credit rating actions and spread expansion," BCS Global Markets commented on March 5.
The covenant amendment process implies Domodedovo plans to issue new debt in the near future, the analysts note.
Poland’s Monetary Policy Council (MPC) left interest rates at their current record low of 1.5% on March 6, once again hinting that any tightening of monetary policy might not come before long – not even before 2022, when the current term of the MPC ends.
Fast economic growth accompanied by only moderate inflation provides no premises for a change in monetary policy at the moment, the MPC said in the statement following the decision.
Inflation is expected to remain subdued this year despite a multi- billion fiscal stimulus announced by the conservative government of Law and Justice (PiS) in late February, the head of the MPC and the NBP governor Adam Glapinski said.
Polish rate setters hold and see little inflationary push from government’s fiscal stimulus