ÁKK plans net issues of bonds, 3-month discount T-bills in March-May

Debt

Hungary's Government Debt Management Agency (ÁKK) plans net forint securities issues of HUF 194 bln according to its March-May issue plan, including net issues of three-month T-bills and bonds and net repayment of 12-month T-bills. 

And the ÁKK now plans to restart regular reverse auctions -- buying back bonds ahead of maturity -- already in March, that is one month earlier than planned in the February-April issue plan, published one month earlier.

In a further indication that the need to replenish the State Treasury's deposits is far less pressing this year than it was at the beginning of last year, ÁKK plans to keep three-month T-bill per-auction offers at HUF 50 bln and to scale back 12-month T-bill offers slightly further, to HUF 40 bln from HUF 45 bln.

ÁKK offered "liquidity bills" -- short-term, usually six-week bills offered on a case-by-case basis to manage the government's liquidity needs -- only once at the beginning of this year rather than auctioning them regularly as last year also indicates an easier budget position.

Also, the debt manager stuck to the original offer at the recent discount T-bill auctions even when demand was relatively high, reflecting no pressure to issue at any cost.

This contrasted with early 2014 when it took ÁKK several months to replenish state deposits through raised 3-month issues and regular issues of liquidity bills after the deposits were reduced to keep gross state debt in terms of GDP on a falling trend.

Three-month discount T-bill expiries will total HUF 600 bln against issues of HUF 650 bln in March-May and there will be two big twelve-month expiries, a HUF 330 bln one on April 1 and another HUF 250 bln on May 27, against combined issues of HUF 240 bln in the three months.

The sale of interest-bearing T-bills, designed for the general public, in a technical assumption, will match the HUF 340 bln such bils expiring in March-May.

The debt manager plans gross bond issues of HUF 705 bln in March-May, including HUF 120 bln bonds issued against shorter bonds at the period's six switch auctions.

The switches are part of the HUF 221 bln bond expiries in the three-month period which include HUF 100 bln of bonds bought back early at the reverse auctions. There will be no major bond expiry in the three months.

Floater auctions will continue to alternate weekly with the auction of fixed-rate bonds, and ÁKK plans to sell on average HUF 53 bln bonds per week, more than the HUF 45 bln planned for February-April, at the 13 bond auctions in the period.

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