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MNB: Demand, allotment of IRSs linked to lending drops at 2nd tender

MNB

Photo by Jessica Fejos

The National Bank of Hungary (MNB) allotted HUF 109.65 bln of its recently introduced three-year interest rate swap (IRS) conditional on lending activity, at a tender yesterday, according to Hungarian news agency MTI.

Demand and allotment dropped from HUF 618 bln at the previous and first such tender held on January 28.

With their accepted bids, banks undertook to raise their SME lending stock yesterday by HUF 27.4 bln annually during the term of the IRS. Including the first tender, banks undertook to grant net HUF 181.9 bln in new SME loans in the facility.

Banks that avail of the IRSs must raise their SME lending stock, excluding non-performing loans, by at least one-fourth of the IRS allocated volume annually. Tender clients pay a fixed interest rate to the MNB while the MNB pays them a floating rate pegged to the six-month BUBOR in six-month interest periods, with net settlement.

Similar to the first tender, the MNB accepted all bids yesterday. It offered HUF 100 bln of the IRSs, down from the HUF 200 bln offer made two weeks earlier.

The MNB has allocated a total of HUF 727.65 bln in IRS at the first two tenders. The MNB said it would allocate HUF 1 trillion of the IRSs when it announced the launch of the IRSs tied to lending activity last November.

The MNB said earlier that it will hold the tenders bi-weekly with at least five such tenders to be held.

The average fixed interest rate payable by clients was 0.23% and the minimum was 0.19% at the February 11 tender, equal to the minimum fixed rate set by the MNB for the tender. Both rates rose from an average of 0.13% and a minimum rate of 0.10% at the January 28 tender. The maximum fixed rate was unchanged at 0.35%. The MNB will pay banks a floating interest rate of 1.35% for the first interest rate period which starts on February 15.

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