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Companies repay loans, issue bonds, make big deposits in May

After deposit withdrawals in April, companies made big bank deposits in May. They continued to repay credit overall but switched part of their debt to banks from loans to bonds, state news wire MTI reports, citing monthly data released by the National Bank of Hungary (MNB).

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The figures suggest that most of the bonds issued in May could have landed with the MNB under the latter’s Bond Funding for Growth Scheme (BGS) in which it purchases corporate bonds in an attempt to beef up the market segment. MNB eased the terms of the program in April to help companies’ financing themselves during the COVID 19 crisis.

Corporate borrowing in May could also have been affected by the launch of the FGS GO!, a version of the MNBʼs Funding for Growth Scheme late in April. Companies borrowed HUF 110 bln under the program until July 3, MNB figures show. The national bank improved the terms of the FGS in which it refinances capped-interest loans to SMEs also to ease access to cheap loans during the pandemic.

Companies deposited net HUF 219 bln with local banks in May after withdrawing HUF 125 bln in April. Total corporate deposit stock stood at HUF 9.831 trillion at the end of the month.

The stock was reduced by HUF 51 bln in revaluations of FX deposits as the forint strengthened about 1.3% to the euro during the month.

Companies repaid net HUF 27 bln in loans to banks in May, less than half of their April repayments but at the same time, they issued HUF 17 bln bonds subscribed by banks.

MNB bought HUF 30.5 bln corporate bonds on the primary market and a further HUF 15.2 bln bonds on the secondary market between April 20 and the end of May, data published earlier show. The figures suggest that the corporate bond holdings of the other monetary institutions – banks – dropped in May.

HUF 15 bln of the repayments were on forint loans and HUF 12 bln on FX loans. Revaluations, mostly on FX loans and bonds, reduced the corporate lending stock by a further HUF 62 bln in May.

By the end of May banksʼ corporate lending stock dropped to HUF 9.037 tln. Within the total the stock of bonds rose to HUF 218 bln. MNB held HUF 261 bln corporate bonds under the BGS program on May 20.