OTP Bank Gains for Eighth Day on Hungary IMF Bet: Budapest Mover

OTP Bank Nyrt. (OTP), Hungary’s largest lender, gained for an eighth day as speculation the country will obtain an international bailout added to a rally in the European financial industry.

The shares advanced as much as 3.8 percent and gained 3.4 percent to 3,944 forint by the close in Budapest, extending the jump since the close on Jan. 11 to 25 percent, the biggest eight-day gain since August 2009. The European Stoxx 600 Banks Index rose 2.1 percent today, bringing its advance in the same eight-day period to 14 percent. Hungary’s benchmark BUX stock rose 0.9 percent, taking its gains so far this year to 12 percent, the biggest rally in Europe and Africa so far in 2012.

Hungary may obtain a loan from the International Monetary Fund and the European Union by March or April, Mihaly Varga, Prime Minister Viktor Orban’s chief of staff, told TV2 in an interview today. Orban will propose “flexible solutions” to European Commission President Jose Manuel Barroso tomorrow in Brussels to EU objections to Hungarian laws, including on the central bank, that have held up talks on a bailout, Varga said.

“The risk of a sovereign default has started to be priced out of the stock,” Attila Gyurcsik, a Budapest-based equities analyst at Concorde Securities, said in a telephone interview. “The positive comments and the communications turnaround which the government performed since the start of the year has helped OTP’s stock a great deal.”

Default Swaps

The cost of insuring against default on Hungary’s debt with credit-default swaps fell to 597 basis points from 610 on Jan. 20 and compared with a record high of 735 basis points on Jan. 5. A basis point is one hundredth of a percentage point.

Orban offered last week to change disputed legislation after the EU threatened a lawsuit against Hungary for encroaching on the central bank’s independence and political meddling with the judiciary and the data-protection authority.

The forint appreciated 1.2 percent against the euro to 300.05, the strongest intraday level in a month.

European stocks climbed to a five-month high, led by a rally in banks, as Germany and France said Greek debt-swap talks are making progress.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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