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ÁKK bond sales fall short; no retail interest hike planned

Debt

The Government Debt Management Agency (ÁKK) sold a combined HUF 45.85 billion of bonds at auction on Thursday, HUF 4.15 bln less than planned. Meanwhile, the agencyʼs head said it plans no raise in the interest rates of government securities targeted at retail buyers.

The ÁKK sold HUF 20.0 bln of three-year bonds, in line with its original offer, after primary dealers bid for HUF 26.31 bln of the papers, state news wire MTI reported. The average yield was 1.91%, 3 basis points under the secondary market benchmark but 9 bps over the yield at the previous auction of the bonds two weeks earlier.

The ÁKK also sold HUF 10.85 bln of five-year bonds, HUF 9.15 bln under plan. Bids came to HUF 10.85 bln, while the average yield was 2.87%, 48 bps over the benchmark and 16 bps over the yield at the auction two weeks earlier. The secondary market benchmarkʼs maturity is two years shorter than that of the auctioned papers, MTI noted.

Finally, the ÁKK sold HUF 15 bln of ten-year bonds, HUF 5 bln over the original offer. Dealersʼ bids came to HUF 29.62 bln, and the average yield was 3.50%, 9 bps under the benchmark and 1 bp lower than the yield at the previous auction of the securities.

ÁKK plans no interest hike

In related news, MTI reported that despite rising interest rates in the economic environment, the ÁKK does not plan on increasing the interest rates of government securities targeted at retail buyers.

ÁKK CEO György Barcza said in an interview in Thursdayʼs issue of business daily Világgazdaság that the agency is constantly monitoring demand for government securities in the retail market, and if it falls, it will act, but so far there have been no signs of the ÁKK needing to do this.

The CEO said current demand is sufficient for the ÁKK to stick to its plan of issuing net HUF 580 bln debt this year. Retail security sales cover around 25% of the financing needs of state debt, which is an optimal rate, he added.

The ÁKK also thinks it is favorable that retail investors tend to choose bonds with longer rather than shorter maturities, MTI added.

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