Photo by Adriana Iacob/Shutterstock.com

The purchases renewed after no BGS purchases were made in June. 

In July MNB bought HUF 25.75 bln bonds from four issuers — Zalaco (HUF 2 bln), Cordia (HUF 18 bln), DVM Construction (HUF 4 bln) and Daniella (HUF 1.75 bln — on the primary market and bought another HUF 8.15 bln bonds issued by two of them — HUF 1 bln of Zalaco bonds and HUF 7.15 bln of Cordia bonds — on the secondary market.

The July purchases brought the corporate bonds bought by MNB since the July 1, 2019 launch of the BGS program to HUF 294.72 bln by the end of July 2020. Of the total, the central bank bought HUF 232.35 bln corporate bonds on the primary market and an additional HUF 62.37 bln bonds on the secondary market.

The allocation for the program is currently HUF 450 bln. 

In April, MNB amended the terms of the BGS as part of a series of moves made to mitigate the effect of the pandemic on funding conditions. 

MNB launched the BGS last summer with the aim of beefing up Hungaryʼs relatively small corporate bond market. In June, MNB rate-setters said their credit program FGS Go! and BGS were their tools of choice to manage downside risks to economic growth if any arise because of the pandemic.

The program limits the MNBʼs purchases to 70% of a series and caps its exposure to any corporate group at HUF 50 bln.