AKK raises offers on strong demand again at bond auction

Hungary’s Government Debt Management Agency (AKK) raised its offers for all three terms on strong demand at a bond auction on Thursday. It sold a combined HUF 48bn of the bonds and sold another HUF 2.2bn of the two shorter bonds at a non-competitive tender following the auction.

Yields were sharply down from the previous auction of the bonds two weeks earlier and also dropped from the respective secondary market benchmarks.

AKK sold HUF 20bn of three-year bonds, sold HUF 18bn of five-year bonds and HUF 10bn of ten-year bonds, all more than planned.

Auction demand rose for the five-year bonds, and fell for the three- and ten-year bonds from the previous auction on January 12 which saw unusually big oversubscription. Demand at the non-competitive tender was moderate compared to January 12 when investors bought up all bonds available at the tender.

AKK sold HUF 20bn of three-year bonds, raising its original offer by HUF 5bn after primary dealers submitted bids for HUF 45.4bn. It sold another HUF 2bn bonds from the HUF 7bn on offer at the non-competitive tender. At the January 12 auction AKK raised the offer also by HUF 5bn to HUF 20bn after receiving bids for HUF 52.8bn.

The average three-year auction yield was 8.44%, 32bp under the secondary market benchmark, and 97bp under the yield at the previous auction of the bonds four weeks earlier. Yields ranged between 8.35% and 8.45%.

AKK sold HUF 18bn of five-year bonds, HUF 6bn more than planned. Auction bids came to HUF 41.0bn, sharply up from HUF 24.8bn on January 12 when AKK offered HUF 10bn of the bonds and sold HUF 12bn. Demand fell at the non-competitive tender where AKK sold HUF 216m bonds, a fragment of the HUF 6.2bn available.

Average five-year yield was 8.64%, 26bp under the secondary market benchmark and 77bp lower than the yield at the previous auction of the bonds two weeks earlier. Yields ranged between 8.60% and 8.65%.

AKK sold HUF 10bn of ten-year bonds, increasing the original offer by HUF 2bn on bids of HUF 22.4bn. On January 12 AKK sold HUF 12bn of the bonds after the same offer attracted bids for HUF 32.9bn. The HUF 3.1bn non-competitive offer attracted no interest.

The average ten-year auction yield came to 8.70%, 20bp under the secondary market benchmark and 68bp lower than the yield at the previous auction two weeks earlier. Yields ranged between 8.64% and 8.72%.