ÁKK plans net bond issues, discount T-bill repayments in Q4

Debt

Hungary's Government Debt Management Agency (ÁKK) plans net forint securities issues of HUF 223 bln in the fourth quarter, scheduling net repayment of three-month and 12-month T-bills and net issues of bonds, the fresh three-month forint financing plan published earlier this week shows.

Net bond issues are planned at HUF 433 bln. About half of the high bond issues will serve to repay discount T-bills as net three-month discount T-bill repayment are planned at HUF 145 bln and net twelve-month bill repayments at HUF 65 bln in the period.

Demand and sale of discount T-bills rose after ÁKK amended the 2014 issue plan in late May, raising forint issues at the expense of FX issues, and also to pay for the government's planned assets purchases and more need to pre-finance EU support. The shift to forint finance in order to reduce the country's external vulnerability was initiated by the National Bank of Hungary which announced measures to attract banks to purchase government securities through replacing its two-week bills with non-tradeable two-week deposits.

Including the switch auctions, gross bond issues are planned to total HUF 630 bln against HUF 197 bln gross bond repayments.

ÁKK plans to sell HUF 570 bln or on average HUF 47.5 bln bonds at the period's twelve bond auctions, with fixed-rate bond auctions alternating with floater auctions on Thursdays.

There will be just HUF 17.4 bln forint bond expiry in October-December. Most of the gross bond repayments will come from HUF 120 bln bonds planned to be repurchased early at the period's six reverse auctions and the HUF 60 bln short-term bonds exchanged into longer ones at the three bond switch auctions in the period.

ÁKK plans net HUF 210 bln of discount T-bill repayments in the period, including HUF 145 bln net three-month T-bill expiries and net repayments of HUF 65 bln twelve-month discount T-bills.

The debt manager plans to sell gross HUF 540 bln and repay HUF 685 bln in three-month discount T-bills in October-December. It plans to sell just HUF 310 bln twelve-month bills at seven auctions against just two expiries, one of HUF 170 bln bills, on October 15, and the other, of HUF 205 bln, on November 26.

The planned T-bill issues translate into somewhat over HUF 40 bln-per-auction offer of both the three-month and the twelve-month discount T-bills. ÁKK raised its three-month bill auction offer from HUF 40 bln to HUF 50 bln. It reduced its twelve-month offer to HUF 40 bln at the beginning of July from HUF 60 bln it offered in the previous five months.

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