CEE Debt Markets: 2007 Key Views

December 2006 | Market Strategy

If there is one region where convergence in foreign currency debt markets has become reality, it is Emerging Europe. As Chart I shows, benchmark spreads on euro-denominated credits have compressed drastically in recent years, to the extent that many of the first, and even second, wave EU-accession countries now have peripheral eurozone credits firmly in their sights. For comparison, the on-the-run 10-Year Italian BTP, maturing in August 2016, is trading 25.6bps wide of the equivalent bund. As such, many of our key views amongst the mainstream convergence plays are nearing their very final legs, or have already reached that point:

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