Oct. 28 (Bloomberg) -- Poland’s government may do more to reduce the budget deficit and debt than finanacial markets anticipate, Barclays Capital said, recommending investors sell its credit-default swaps.
“We remain confident about Poland’s fiscal adjustment path and think there is a chance that the government will surprise the markets by delivering more,” Barclays analyst Daniel Hewitt wrote in an e-mailed note today.
Investors should buy the Markit iTraxx SovX Index for central and eastern Europe for Polish five-year contracts, he wrote. Credit-default swaps insure against non-payment.
Barclays also recommends buying the zloty and selling the forint as Poland is more resilient to contagion from the euro region’s debt crisis, Hewitt wrote.
“The external contagion risks for the region remain elevated, but Poland is better prepared to withstand the shock,” he wrote.
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