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One year bond auction excites investors

The Slovak currency exchange rate against major hard currencies was relatively stable from October 14 to 21, as customers did not show any strong interest to buy or sell Slovak crowns and the interest of foreign institutions remained very low. The market is waiting for any new signals from the new government in order to guess how they will try to solve the main financial problems of the country.
The Slovak currency index fluctuated between 9.5 and 12.5% on the weak side of the band, most of the time hovering at levels around 10-11%. Interest rates experienced some easing on the short end of the yield curve as short-term funds up to 7 days hovered below 20%. Long term tenures stayed at high levels between 22 and 28%, with market spreads of 4-5%.

The Slovak currency exchange rate against major hard currencies was relatively stable from October 14 to 21, as customers did not show any strong interest to buy or sell Slovak crowns and the interest of foreign institutions remained very low. The market is waiting for any new signals from the new government in order to guess how they will try to solve the main financial problems of the country.

The Slovak currency index fluctuated between 9.5 and 12.5% on the weak side of the band, most of the time hovering at levels around 10-11%. Interest rates experienced some easing on the short end of the yield curve as short-term funds up to 7 days hovered below 20%. Long term tenures stayed at high levels between 22 and 28%, with market spreads of 4-5%.

But the main issue within the covered period was the auction of one-year state bonds, as this was considered to be one of the last two auctions of state bonds this year. The market interest was very high, as some analysts expected this auction to be their last chance to get high yields from Slovak State treasuries, as there were some signals that the new government would try to get funds from foreign institutions.

The ministry of finance cancelled the auction of 2-year state bonds scheduled for the October 27th immediately after they announced the results of the auction of one-year papers on October 20th. Demand worth 2.387 billion crowns was accepted out of total demand of more then 7.5 billion, with maximum accepted yield at 29.450% and an average of 28.850.

The market expects interest rates to stay at high levels and the Slovak currency to stay vulnerable, as there are still big concerns about the real state of country's financial sector and expectations of possible surprises during the hand-over of political power at the end of the month.

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