Polish Bonds Fall as Downgrade Looms
World Economy

Polish Bonds Fall as Downgrade Looms

Polish bonds fell, sending yields on five-year notes up the most in two weeks, as Moody’s Investors Service said wrangling over changes to its Constitutional Court is “credit negative.”
The yield on the government bond due in April 2021 rose four basis points to 2.20%. While implications for the changes to the court’s independence remain unclear, the constitutional crisis and rise of domestic political risk may hurt Poland’s creditworthiness and appeal for foreign investors, Moody’s Assistant Vice President Marco Zaninelli wrote in a report issued Tuesday, Bloomberg reported.
Moody’s, which has kept Poland’s rating at A2, the fifth-lowest investment grade, with a stable outlook since 2006, is poised to issue a new review on May 13. The zloty fell the most in four years after Standard & Poor’s in January handed Poland its first credit-rating cut since the fall of communism, after a new government led by the Law & Justice party took control of public media and initiated plans to overhaul the nation’s top court.
“This is a very serious warning,” said Rafal Benecki, the Warsaw-based chief economist at ING Bank Slaski SA. “The high momentum of negative political changes is something which can lead to deterioration of fundamentals. Thus the agency may want to cut the rating.”

  Political/Judicial Problems
Moody’s comments come as an overhaul of the judicial system has triggered protests by thousands of Poles and strained relations with its western allies. The Law & Justice party annulled the previous government’s appointments to the top court, picked its own judges and revamped the tribunal’s rules to make it more difficult to strike down laws. Law & Justice leader Jaroslaw Kaczynski met last week with opposition groups to seek an end to the deadlock without reaching an agreement.
The zloty rose 0.2% to 4.24 per euro in Warsaw, extending its gain in the past month to 1.9%, the third-best performing currency among 24 emerging-market currencies tracked by Bloomberg. The zloty and bond prices have recovered losses triggered by the S&P cut to BBB+ on Jan. 15.
“A downgrade by Moody’s would probably have a much more limited impact on the bond market than the S&P’s decision in January, mostly because it would not be entirely unexpected,” Piotr Kalisz, chief economist at Citigroup Inc.’s Polish unit, said in a report on Monday.
Finance Ministry spokesman Waldemar Grzegorczyk declined to comment about the Moody’s report on Monday when reached by phone. Poland could end up in front of the European Court of Human Rights unless a solution is found to the current constitutional crisis, Thorbjoern Jagland, secretary general of Council of Europe, said Tuesday at a press conference in Warsaw.

Short URL : http://goo.gl/6KmwfO
  1. http://goo.gl/QkWyFB
  • http://goo.gl/Ay34TR
  • http://goo.gl/eVT3Od
  • http://goo.gl/Z803W7
  • http://goo.gl/qZQ1gc

You can also read ...

China Challenges US Solar Panel Duties
China says it is challenging a US tariff hike on solar panels...
In a retaliatory move, President Recep Tayyip Erdogan’s government on Wednesday announced higher tariffs on some US imports, namely on passenger cars (120%) and leaf tobacco (60%).
Turkey has raised tariffs on some US imports, including...
World trade volume growth peaked in January at almost 5.7% year-on-year but nearly halved to less than 3% by May.
Cyclical indicators point to slower and more uneven growth in...
Moody’s Predicts Slower Fiscal Progress in S. Africa
South Africa’s fiscal consolidation will be slower than the...
File picture of Kim Jong-un (L) and Moon Jae-in at the truce village  of Panmunjom, South Korea.
South Korea President Moon Jae-in on Wednesday offered a bold...
Nigeria CPI Drops to 11.14 Percent
Nigeria’s National Bureau of Statistics says the consumer...
Surging Inflation Mars Philippines Growth
The Philippine economy in 2018 is a story that can be summed...
Transport tickets and fuel have driven up costs for consumers.
Inflation in the UK climbed in the month of the July, as had...