ÁKK launches new series of PEMAK bonds

Deals

Earlier this week, the Government Debt Management Agency (ÁKK) started distribution of a new series of its Hungarian Premium Euro Bond (PEMAK) which pays 2% premium over Eurozone inflation, ÁKK’s website shows.

ÁKK cut the spread over the Eurozone harmonized consumer price index (HICP) further from 2.25% on the third series launched in May 2013 and closed early in January and from 2.5% on the first two series, launched in November 2012 and in January 2013.

The interest for the first interest period, which lasts between March 3 and October 21 of this year, will be 2.8% annually.

The size of the current offer is €200 million and the 2017/X bonds are expected to be distributed until March 3, 2015. They will mature on April 21, 2017.

ÁKK is offering a new PEMAK series after a two-month break. It closed the distribution of the previous, third, series in early January without offering a new one as was the practice earlier. The debt manager said only in the middle of February that it will resume distribution of PEMAKs soon, adding that the new bonds would be on sale only at the State Treasury outlet, and will no longer be distributed by banks.

ÁKK launched the three-year PEMAK bonds, the first domestically distributed foreign- currency-denominated government papers, originally aimed at the general public, at the end of November 2012. In addition to Hungarian private individuals, non-residents as well as resident and non-resident institutional investors are eligible to buy the bond.

The stock outstanding was €1.35 billion at the end of 2013. Retail purchasers held 24.4% of the stock at that time, domestic institutional investors held 70.8% and foreign investors held 4.8%.
ÁKK’s 2014 issue plan revealed in early January planned combined sales of €400 million of PEMAK and of permanent residency bonds, which assure the expedited acquisition of a residence permit in Hungary. Permanent residency bonds were sold to a value of €125.5 million by the end of February, the bulk in 2014, according to press reports.

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