ÁKK publishes 2022 financing plan

Debt

Hungary will issue net HUF 2.663 trillion of government securities next year to cover a HUF 3.153 tln central budget net funding requirement, together with the partial utilization of liquidity reserves, news agency MTI reports, citing the recently released 2022 financing plan of the Government Debt Management Agency (ÁKK).

The 2022 plan sets gross security issuance and borrowing at HUF 9 tln, or 15% of expected GDP, including switch auctions. The gross issuance is under the HUF 11.593 tln target for 2021 and the HUF 11.311 tln average gross government borrowing volume over the past five years, ÁKK noted.

ÁKK plans to reduce switch auction volume to HUF 1 tln from HUF 1.5 tln in 2021.

It will add a new, ten-year forint green bond to its securities mix to be issued every month. ÁKK will continue to issue its 30-year green bonds on a quarterly basis.

FX debt ration ceiling raised

ÁKK will widen the FX debt ratio tolerance band from 10-20% to 10-25% "to increase the optionality and room for maneuver of financing strategy, by taking into account the relative cost advantage of FX financing due to rising forint yields"; however, it will still aim to keep the FX debt ratio under 20% "in the medium term".

The agency will switch "at least USD 2 bln" of FX bonds in H2 2022 to pre-finance FX bonds maturing in 2023 and 2024 and further increase the average term-to-maturity of debt.

ÁKK aims to "strengthen further" Hungary's market presence in Asia by issuing more green bonds and could issue a samurai bond in Q1 2022.

The financing plan targets FX project and syndicated loan financing up to the equivalent of EUR 2 bln from lenders such as the European Investment Bank (EIB) and the Asian Infrastructure Investment Bank (AIIB).

Net retail issuance target HUF 1 tln

ÁKK said it continues to aim to boost state debt held by households to HUF 11 tln by 2023 and set 2022 net retail issuance at HUF 1 tln.

The agency will further advance the digitalization of distribution channels for retail securities and will draft a new retail debt strategy in the course of the year.

ÁKK noted that outstanding retail government securities owned by households is expected to grow by HUF 1 tln in 2021, too.

Forint retail securities make up about one-quarter of Hungary's state debt.

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