ÁKK issued net HUF 365 billion of liquidity bills – six-week discount T-bills issued on a case-by-case basis to manage the State Treasury’s short-term liquidity – in January-February. The continuation or discontinuation of regular liquidity T-bill sales will determine whether a shift towards short-term financing evident in January-February continues.
The large net issues indicate that ÁKK is proceeding in line with the revised financing strategy announced early in January. Under the strategy, in 2014 it plans to refinance part of Hungary’s expiring forex debt with forint rather than forex issues. ÁKK said at the time that it planned gross foreign currency issues of €4.6 billion this year, €800 million less than maturing forex debt. The plan includes the issue of €3 billion to €3.5 billion in foreign currency-denominated bonds.
The March-May plan shows net bond issues of HUF 454 billion. It puts gross bond issues at HUF 514 billion, with no big bond expiries and no reverse auctions. The plan is contrary to the issue calendar on ÁKK’s website which shows reverse auctions being re-started early in March after a two-month hiatus, suggesting a bigger than expected government financing need and/or greater caution.
Despite the net repayments, gross discount T-bill issues will remain high. Offers of both three- and twelve-month discount T-bills will remain at HUF 60 billion, showing that ÁKK plans to refinance recent big sales of three-month discount T-bills through three-month issues. Sales of these bills have climbed as high as HUF 90 billion recently.
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