AKK cuts six-week T-bill sales on light oversubscription


Demand just exceeded the HUF 50bn six-week "liquidity" T-bills on offer and the Government Debt Management Agency (AKK) sold HUF 35bn of the bills at rising yields at an auction on Monday.

The auction was the first one since Moody’s Investors Service downgraded Hungary to non-investment status, maintaining negative outlook, late on Thursday.

AKK cut is the sale of the bills that will expire on December 28, after primary dealers bid for HUF 52.3bn. Demand was down from HUF 117.5bn one week earlier when the debt manager sold the announced HUF 50bn bills. Two weeks earlier AKK refused all bids at an undersubscribed auction

The average yield came to 7.24% at the auction, up from 6.63% at the previous liquidity bill auction held on November 21 and also up from the 7.15% closest, three-month secondary market benchmark on Friday. The secondary market benchmark, calculated on a bill expiring on March 7, 2012, jumped 52bp on Friday after the Moody’s downgrade.

Yields varied in a wide range between 6.74% and 7.50%.

Light oversubscription and varying yields came as no surprise considering that National Bank of Hungary’s (NBH) will hold a rate-setting meeting on Tuesday. The NBH is widely expected to raise the 6% central bank base rate on Tuesday. The base rate equals to the yield of the central bank’s two-week zero-coupon bond, the NBH’s main liquidity-managing instrument.


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