Hungary bond auction results adequate, debt manager says

Thursday's government bond auction results can be considered adequate, given the circumstances, and the lower than planned auction sales will not cause any disruption of financing, a senior official of the Government Debt Management Agency (ÁKK) told Econews on Thursday.

The official said the auction demand was adequate, considering renewed tensions on international markets ahead of a decision on Greece as well as domestic discussions about next year's budget.

ÁKK's issues were well over the original plan earlier in the year when market conditions were favourable, and that buffer can see Hungary comfortably through periods when the market is weaker, the official said. ÁKK announced earlier that it was over-financing, and that its policy was to flexibly adjust to the market, he added.

ÁKK cut sales of the five- and 15-year bonds at the auction on Thursday. Both were just slightly oversubscribed. It sold the announced amount of three-year bonds, on which bids were more than 1.5 times the offer.

The official acknowledged higher yields at the auction, compared to the secondary market benchmarks, but noted that the gap between the average and maximum yields had narrowed compared to recent auctions.

It is wrong to speak about a series of weak bond auctions, he said, adding that subscription was double the offer at the previous bond auction held two weeks earlier. He said there was a "structural discrepancy" at that auction, with weak demand for the five-year papers on offer and threefold oversubscription for the ten-year ones. ÁKK adjusted the sales accordingly and sold the planned HUF 43bn bonds, making up with increased sales of the ten-year bonds, while it cut in sales of the five-year bonds.