ÁKK sells more than planned three-month bills, yield jumps

Primary dealers bid for HUF 101.5 bln of the papers which expire on April 13. Average yield was 1.13%, 19 bps over the secondary market benchmark and 31 bps higher than the yield at the previous auction of the bills one week earlier.

Demand was high, but yield expectations apparently also rose as auction yields surpassed 1pc for the first time since last July. The three-month benchmark yield bottomed out at 0.38% late last September. The range of accepted yields was unusually wide for the second auction in a row, indicating uncertainty about prospective yields.

The pattern was similar to yesterdayʼs liquidity bill auction, suggesting that investors have money for short-term investments but are making use of the budgetʼs likely high liquidity needs. Similar to auctions in the first days of January in previous years, ÁKK raised its offer of both bills to refill the State Treasury accounts after it reduced auction sales low and raised repayments to keep the year-end gross state debt ratio on a declining trend, as required by law.