UPDATE - Hungary bond auction unsuccessful

Debt

The Government Debt Management Agency (AKK) refused all bids at a bond exchange auction on Wednesday.

None of the bids submitted by primary dealers to exchange HUF 7.7bn of 2013/D bonds and HUF 5.3bn 2013/E bonds for 2020/A bonds were accepted.

AKK told MTI after the auction that demand was adequate but yields did not make the exchange worthwhile for the state.

The debt manager fixed the price of the two bonds that could be used as payments at the exchange auction over Tuesday’s respective benchmark yield so primary dealers probably priced 2020/A bonds too low in their bids.

AKK said before the auction it would count 2013/D bonds, expiring in February 2013, as payment at a yield of 8.97%, and it would accept as payment 2013/A bonds, expiring in November 2013, at a yield of 9.11%. Both yields were over the 8.60% comparable one-year benchmark on Tuesday. The one-year yield rose to 8.80%, a two-and-half-year peak, on Wednesday.

The nearest, ten-year benchmark to the nine-year bonds on offer closed 2011 at 9.75% and leaped over 10% on the first business session of the year. It rose to 10.32% on Tuesday and rose further to 10.58%, the highest level since April 2009, on Wednesday.

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