More positive news on ratings
CEE Bond Market Report , 8. Juli
The fiscal consolidation package recently approved by the Romanian government looks strong enough to avoid a loss of investment grade this fall. Slovenia is likely to get another two rating upgrades (potentially already in October) after S&P moved its rating to AA, while Fitch and Moody’s changed the outlook to positive in 2Q.
Except for Poland and Serbia, we see little space for CEE central banks to cut interest rates this year. In Czechia, it seems that the central bank is done with rate cuts this year. In Hungary and Romania, interest rate cuts are conditional on local inflation developments. The next cut by Romania’s central bank is expected only in 1Q26 if core inflation remains sufficiently contained.
The YTD net issuance of Croatia, Poland and Slovakia almost fully covers their full-year needs. Thus, only a tiny volume is needed to be raised on top of the roll-over of maturing debt in 2H25 to cover the full-year gross financing needs. The YTD net issuance of Hungary and Slovenia is already above the FY target, giving them comfortable breathing space for more selective issuance or even buy-backs.
We see only tiny space for further decline of yields this year. Spreads on Serbia's Eurobonds look extremely tight compared to Hungary while implied 5Y5Y ROMANI yield spreads offer enormous pickup.