Hungary’s Monetary Council left interests rates unchanged at 8%. Despite accelerating inflation (8.8 y/y in February) and appreciating currency, the decision was expected. But medium term inflation is forecast to be much lower at 3%. Analysts believe the Council is in a wait-and-see mood and may consider cutting rates mid-2008.
Fitch released a report arguing Bulgaria’s competitiveness is not being undermined despite her large CA deficit, which is more accurately attributed to booming domestic demand. Bulgaria had a budget surplus of 3% last year but the expansion of the bank sector is increasing external debt.
S&P upgraded Morocco from stable to positive and confirmed a rating of BB+ long-term and B short-term foreign currency as well as BBB long-term and A-3 short-term local currency sovereign credit ratings. Growth according to S&P, is expected to be around 5% in 2007-09. Morocco’s upgrade is down to an improvement of macroeconomic prospects namely the reduction of deficit to 1.2% GDP in 2006.
First Bank of Nigeria has brought to auction a 10-year $175m bond to raise its capital adequacy ratio. The bank, which is rated B by S & P, was given a 9.5% yield by Merrill Lynch. First Bank is the second bank to issue a bond in Nigeria following Guaranty Trust Bank’s $350m issue in January, despite the sovereign’s absence in the bond market. Analysts expect a bumpy ride in the secondary market after market volatility and subsequent risk aversion affected Guaranty’s issue.
- Information provided by Euromoney group sources.