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May 12, 2017 www.intellinews.com I Page 26
bne:Credit Mongolia removes final
obstacle to $5.5bn IMF bailout
Yields fall sharply at Hungarian bond auction
Mongolia’s legislature annulled a controversial banking require- ment for foreign investment-backed projects last week, according to Mongolia’s state run media.
The International Monetary Fund postponed its decision on a $5.5bn bailout for Mongolia due to newly arisen concerns over the now-annulled law that would have affected foreign exchange and investment. The law stated that revenues from large-scale projects had to pass through a Mongolian bank account.
The bailout was originally set to be finalised on April 28, granting Mongolia its first tranche before the start of May. Mongolia has ful- filled all other prerequisites set by the IMF to receive the bailout.
Hungary’s Government Debt Management Agency (AKK) sold a combined HUF50bn (€160.9mn) of 3-, 5- and 10-year bonds at an auction on May 11.
The volume sold was HUF5bn over plan as demand strengthened and yields in all maturities fell ahead of a review by Fitch Ratings scheduled for May 12. The agency is thought likely to raise the out- look on the sovereign.
"The market is not expecting Fitch to revise Hungary's ratings, but there is an expectation that it will improve its outlook from stable to positive," Raiffeisen Bank analyst Gergely Palffy said. The forint gained against the euro after the headline CPI index fell to 2.2% in April and foreign investors raised interest in the bond market.
Czech inflation surprised as it retreated to 2% y/y in April, as re- ported by statistics office CZSO on May 10. The result shows prices rose a full 0.6pp slower than in March.
The result in April follows the pattern seen across much of Central & Eastern Europe. A surge around the turn of the year has shown signs of fading in March and April, largely thanks to the lowered impact from oil and food.
The fall back in rising prices could trim recent hawkish hints from the Czech National Bank. The central bank spent the early months of the year insisting that inflation is likely to drop again, but since scrapping its cap on the koruna on April 6, it has hinted monetary policy could tighten further as soon as markets settle.
Czech inflation retreats in April