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AKK raises bond auction sale on high demand

Debt

The Government Debt Management Agency (AKK) raised the sale of all three bonds sharply, to HUF 67.5 billion on more than threefold oversubscription at Thursday's bond auction.

It sold a further HUF 15.3 billion bonds at the non-competitive tender following the auction, bringing Thursday's primary sales to HUF 82.8 billion. Yields dropped sharply from the previous auction on July 26, in line with a drop of market yields and were also well down from Wednesday's benchmark. AKK sold HUF 67.5 billion instead of the originally offered HUF 45 billion of the three bonds, as combined demand nearly doubled to HUF 151.3 billion from HUF 78.2 billion two weeks earlier. The three- and five-year average auction yields were at their lowest levels since last September and the ten-year yield was the lowest since last August.

AKK sold HUF 30 billion of three-year bonds, raising its original offer by HUF 10 billion after primary dealers bid for HUF 61.0 billion. Demand was almost three-fold of that of the previous auction when AKK cut sales by HUF 5 billion to HUF 15 billion on light oversubscription. Demand for the three-year bonds dropped at the non-competitive tender, with bids and sale of HUF 2.2 billion against an available maximum of HUF 11.3 billion. The three-year average yield was 6.84%, 22bp under the secondary market benchmark and 52bp lower than yield at the previous auction of the bonds two weeks earlier.

Yields ranged between 6.79% and 6.90%. AKK sold HUF 22.5 billion five-year bonds, raising the announced volume by HUF 7.5 billion. Bids came to HUF 52.4 billion against HUF 30.7 billion two weeks earlier when AKK sold the originally offered HUF 15 billion. AKK sold HUF 8.0 billion bonds at the non-competitive tender where bids and sale was just HUF 200m less than the volume on offer. The five-year average yield fell 13bp from Wednesday's benchmark and fell 44bp from the previous auction to 7.09%. Yields ranged between 7.04% and 7.15%.

AKK sold HUF 15 billion of ten-year bonds, HUF 5 billion more than planned after receiving bids for HUF 37.9 billion. Two weeks earlier raised the ten-year sale by HUF 4 billion to HUF 15 billion after receiving bids for HUF 26.0 billion. Non-competitive tender sales totalled HUF 5.1 billion, only slightly below the available maximum of HUF 5.2 billion. Average ten-year yield was 7.33%, 9bp under the benchmark and 28bp lower than the yield a the previous auction of the bonds two weeks earlier. Yields ranged between 7.29% and 7.35%.

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