NewEuroMTS, the market for trading euro-denominated government securities of the EU Accession States and which is aimed at promoting the efforts of the EU Accession States towards integration into the European fixed-income capital markets, was successfully launched on November 17. Securities from Poland and Hungary, the first countries to meet the listing requirements of the segment, immediately benefited from the liquidity, efficiency and transparency of the MTS model.
“MTS has once again validated its benefits of strengthening government bond markets via NewEuroMTS. We have in fact already seen a reduction in the bid offer spreads on the securities that we have listed,” said Edward Basinski, Deputy Director of the Foreign Policy Department of the Ministry of Finance of Poland. “Tighter bid offer spreads, and the removal of the ‘liquidity premium,’ could mean a reduction of funding costs for us as an issuer.”
Gianluca Garbi, CEO of EuroMTS, said: “The objective of NewEuroMTS is to assist the development of the debt markets of the EU Accession States in the same manner that EuroMTS has contributed to the growth and development of the eurozone debt markets, offering an objective definition for Eurobenchmark Bonds™. We look forward to the adoption of the minimum outstanding size of NewEuroMTS by the issuers of the other EU Accession States in order to create a curve of liquid issues, not only promoting the internationalization of their bonds but their convergence with the European market.”
Claudia Segre of Unicredito Banca Mobiliare, said: “As a dealer in Polish and Hungarian government bonds, we are delighted to see the birth of a very liquid market in these securities – it took less than a week of trading on MTS to see significant improvements in the quality of prices. We are now not only able to trade in these bonds more transparently and effectively but also in a far more cost efficient manner.”
Initially, four securities were eligible for listing and trading at launch. The bonds of the Republic of Hungary 4% 2010 and 4 % 2013 and Poland’s 5 % 2011 and 4 % 2013 were being quoted by 12 banks who have committed to ensure liquidity on the market. To be eligible for listing, bonds must be issued by the EU 1st wave Accession States, issued or tapped no earlier than 2 years prior to listing date, with a minimum maturity of 15 months, investment-grade rated and a minimum outstanding size of €1 billion.