ÁKK sells HUF 82.5 bln of bonds at auction, over plan

Debt

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The Government Debt Management Agency (ÁKK) sold a combined HUF 82.5 billion of bonds at auction on Thursday, raising its original offer by HUF 27.5 bln, according to state news wire MTI.

The ÁKK sold HUF 30 bln of three-year bonds, raising its original offer by HUF 10 bln as primary dealers bid to buy HUF 75.49 bln of the securities. The average yield was 0.57%, level with the secondary market benchmark and 4 basis points higher than the yield at the previous auction of the bonds.

The ÁKK also sold HUF 30 bln of five-year bonds, likewise raising its original offer by HUF 10 bln after dealers bid to buy HUF 57.58 bln of the bonds. The average yield was 1.04%, 5 bps under the secondary market benchmark and 6 bps under the yield at the previous auction of the bonds.

In addition, the ÁKK sold HUF 22.5 bln of ten-year bonds, raising its original offer by HUF 7.5 bln. Bids came to HUF 41.30 bln. The average yield was 2.04%, 11 bps under the benchmark and 19 bps lower than the yield at the previous auction.

State news agency MTI noted that the strong demand at the bond auction came a day after a tender for placements in the National Bank of Hungaryʼs three-month deposit facility, the central bankʼs main sterilization instrument, reduced the depo stock by HUF 100 bln to HUF 175 bln. The stock is set to fall even further as central bank policy-makers have set a HUF 75 bln year-end cap on the deposits. 

At the same time, MTI reported, the fall in yields for the longer terms at the auction followed the announcement on Tuesday by the MNB Monetary Council of the introduction, from next January, of unconditional interest rate swap facilities and a mortgage bond purchase program that aim to flatten the yield curve.

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