IPB's situation gets precarious and it now appears likely that the bank will undergo a substantial shake-up prior its general meeting on June 28. IPB's has reportedly a CZK 20 bil. hole in its books and money is not coming. Additionally, the bank is losing deposits (CZK 17 bil. so far this year - more after a damning reports and bungled general meeting). Perhaps, IPB should produce some steel: the Cabinet has awarded more than CZK 25 bil. in soft-loans and bailouts mainly to large steel companies in 1999 and 2000.
Politicians have got to their business-as-usual as they began criticizing each other for (not)cooperating with the EU. As always, it is Klaus' ODS who sets the tone of the discussion. The (right-of-the center, mind you) ODS also criticized too fast and "irresponsible" privatization of the current leftish Cabinet.
The Czech koruna hold on its latest gains against the dollar and remains firmly below the 38 CZK/USD level at 37.90. The koruna strengthened a bit against the euro falling below the 36 CZK/EUR level and ignoring rising euro interest rates.
Bonds were in rather bullish mood on Friday, the first time this week. Despite not very favorable construction output in April, bonds strengthened as market makers were bit covering their short positions and no clients have been selling that much as in last days. Besides that, we have had another rally down on 4 years IPB bonds, which fell down almost another 3 percentage points.
However, the market was very quite compared to previous days as the trading volume was very low and the bonds haven't even reached Thursday's opening prices.
Current benchmark prices: MoF 6.75/05 101.40-70 (+20 bps), MoF 6.30/07 98.95-25 (+25 bps), MoF 6.40/10 99.10-40 (+30 bps).
(Ondrej Schneider and Dalimil Vyskovsky)