Yields rise, but demand healthy at bond auction

Debt

Yields rose significantly and demand remained healthy although fell from two weeks earlier at a bond auction by the Government Debt Management Agency (ÁKK) on Thursday.

ÁKK sold a combined HUF 45 billion of the three bonds, raising the sale of three-year bonds and selling the announced volume of five- and ten-year bonds at the auction. It sold an additional HUF 12.1 billion bonds at the non-competitive tender following the auctions.

Combined auction demand fell to HUF 86.5 billion from HUF 94.3 billion at the previous auction on March 8.

ÁKK sold HUF 20 billion of three-year bonds, raising its original offer by HUF 2 billion after primary dealers bid for HUF 41.4 billion. Demand was little changed from HUF 42 billion at the previous auction on March 8 when ÁKK raised its offer by HUF 4 billion, selling HUF 22 billion three-year bonds at dropping yields.

Non-competitive tender sales totaled a further HUF 5.5 billion against the available HUF 7.3 billion, bringing the total sold of three-year bonds on Thursday to HUF 25.5 billion.

Average yield at the current auction was 8.56%, 16bp over the secondary market benchmark and 24bp higher than the yield at the previous auction of the bills two weeks earlier. Yields ranged between 8.52% and 8.58%.

ÁKK sold HUF 15 billion of five-year bonds, in line with the original offer. Dealers bid for HUF 24.8 billion, less than the HUF 29.4 billion bids submitted on March 8.

ÁKK sold an additional HUF 3.5 billion five-year bonds at the non-competitive tender, raising Thursday's five-year sales to HUF 18.5 billion. Non-competitive tender sales were below the HUF 5.1 billion available.

Average yield was 8.76%, 21bp over the secondary market benchmark and 19bp higher than the yield at the previous auction two weeks earlier. Yields ranged between 8.64% and 8.79%.

ÁKK sold HUF 10 billion of ten-year bonds, as planned. Offers came to HUF 20.3 billion, down from HUF 22.9 billion two weeks earlier. ÁKK sold HUF 3.1 billion ten-year bonds, slightly less than the HUF 3.3 billion on offer, at the non-competitive tender, thus selling HUF 13.1 billion of the bonds on Thursday.

Average yield was 8.96%, 23bp over the secondary market benchmark and 36bp higher than the yield at the previous auction. Yields ranged between 8.87% and 8.99%.

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