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Demand jumps for three-month bills, yields still up

Debt

The Government Debt Management Agency (ÁKK) sold the announced HUF 30 bln of three-month discount T-bills despite nearly fourfold oversubscription at an auction on Tuesday. Auction yields rose slightly from a week earlier, and were also over the latest secondary market benchmark.

ÁKK received HUF 118.4 bln bids for bills expiring on February 11, 2015. Demand was sharply up from HUF HUF 39.2 bln at the previous auction on October 28 and an undersubscribed auction on October 21 that prompted ÁKK to reduce its auction offer to HUF 30 bln from the HUF 40 bln it offered since the end of September.

The average auction yield was 1.76%, 5 over Monday's secondary market benchmark, calculated on a series expiring eight weeks later. Accepted yields moved between 1.74% and 1.78%.

Auction yields rose for the third auction in a row after an almost steady fall since the middle of February. Average yield at the three-month auctions fell under the base rate late in April and the gap widened after the MNB wound up an almost two-year easing cycle to 80 bp by mid-October.

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