ÁKK Modifies 2023 Financing Plan

Debt

Hungary's Government Debt Management Agency (ÁKK) announced late on Monday that it is modifying its financing plan for 2023 in light of a HUF 4.113 tln increase in net financing needs, state news wire MTI reports.

ÁKK said the total planned gross issuance in 2023 is increasing by HUF 422 bln to HUF 11.249 tln.

The agency is increasing forint-denominated retail issuance by HUF 418 bln to HUF 5.085 tln. It noted that the volume of annual forint retail gross issuance stood at HUF 3.794 tln at the end of August. The most popular retail security is still the inflation-linked PMÁP with an issued amount of HUF 2.644 tln and with a share of 70% within the total forint retail issuances in 2023.

On the forint institutional market, ÁKK is decreasing institutional issuance by HUF 75 bln to HUF 2.797 tln. ÁKK said it has experienced higher-than-expected market demand for treasury bills in 2023. In addition to their popularity among retail investors, new legislation concerning mutual funds increased the demand for T-bills on the institutional market as well. 

Adapting to market conditions AKK increased the issuance of T-bills and floating rate notes. Elevated T-bills issuance resulted in an excess liquidity of nearly HUF 600 bln creating opportunity to reduce forint institutional bond issuance, while AKK still expects a decrease in T-bills outstanding for the remainder of 2023. 

The primary objective of the new forint institutional plan is to further smoothen the maturity profile and gradually reduce forint institutional bond maturity peaks in 2025 and 2026.

ÁKK also said it is decreasing the amount of switch auction issues by HUF 150 bln to HUF 240 bln in 2023.

For the FX financing plan, ÁKK is increasing issuance by HUF 230 bln to HUF 3.127 tln, creating an opportunity for a benchmark-sized Eurobond issuance. Any excess liquidity can be utilized for pre-financing or buybacks, it added.

ÁKK noted that the dollar issuance plan remains unchanged and further dollar bond issuance cannot be expected in 2023. Furthermore, ÁKK retains the opportunity for private placements and dollar and/or euro issuance under the recently established ECP Program, subject to investor demand.

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