Large demand for six-week T-bills at auction

Debt

Demand was unusually large for the HUF 40bn six-week "liquidity" T-bills on offer and sold by the Government Debt Management Agency (AKK) at an auction on Monday. Yields were well below the closest, three-month secondary market benchmark.

AKK sold the announced HUF 40bn of the bills expiring on February 22 after receiving bids for HUF 148.5bn.

The average yield came to 7.77% at the auction, sharply down from the closest, three-month secondary market benchmark, of 8.41%, calculated on a series expiring on May 2, on Friday.

Yields varied between 7.55% and 7.88%.

The auction was the first one since Fitch downgraded Hungary to non-investment status, with a negative outlook, on Friday. The move followed similar steps by Moody’s at the end of November and by Standard and Poor’s late December.

AKK last auctioned liquidity T-bills on November 28, 2011 when it sold HUF 35bn against an only slightly oversubscribed HUF 50bn offer at an average yield of 7.24%. That auction came after Hungary’s downgrade by Moody’s, and the average yield rose 61bp from the previous liquidity bill auction held one week earlier.

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