Hungary Issues USD 4.25 bln of FX Bonds - Varga


Hungary has issued USD 4.25 billion of FX bonds, Finance Minister Mihaly Varga said in a post on Facebook on Thursday, according to a report by state news wire MTI.

Offers for the bonds came to over USD 12 bln, "showing investor confidence in the Hungarian economy remains strong", Varga said.

Part of the proceeds from the bond issue will be used for a buyback of short-term dollar bonds, he added.

The ratio of FX debt within Hungary's state debt remains under the 30% threshold, he said.

He noted that Hungary's year-end state debt ratio fell to 73.5% of GDP at the end of last year from 76.8% at end-2021, while the fiscal deficit reached 4.9% of GDP. "Balance indicators will continue to improve: we count on a further reduction in state debt and a lower deficit this year, too," he added.

Hungary's Government Debt Management Agency (ÁKK) recently raised the upper threshold for FX debt to 30% for 2023 compared to a range of 10%-25% earlier. In its 2023 Financing Plan, published late in December, ÁKK said it planned gross issues of dollar bonds up to USD 4 bln in H1 2023 as well as buybacks of USD 1 bln of FX bonds maturing in 2023-2024.

It also said a benchmark-sized eurobond issue is planned for H2 2023.

In a press release later on Thursday, ÁKK said it issued USD 1.5 bln of five-year bonds, USD 1.5 bln of 10-year bonds and USD 1.25 bln of 30-year bonds on Wednesday.

The yield on the five-year bond was 6.27%, 240 bp over the benchmark US Treasury yield, while the yield on the ten-year bond was 6.51%, 280 bp over the benchmark US Treasury yield. The yield on the 30-year bond was 7.1%, 325 bp over the benchmark U.S. Treasury yield.

Part of the proceeds will be used to buy back USD bonds maturing in 2023 and 2024, and the rest will go toward "general financing purposes", ÁKK said.

Lead managers for the issue were BNP Paribas, Citibank, Deutsche Bank, Goldman Sachs Bank Europe SE, and JP Morgan.

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