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ÁKK raises all offers on strong demand at bond auction

On strong demand, the Government Debt Management Agency (ÁKK) raised its offer for all the three terms at a bond auction on Thursday. Average auction yields were under the respective benchmarks.

ÁKK sold a combined HUF 67.5 billion of three-, five- and ten-year bonds, raising its offer by 50% from HUF 45 billion after receiving offers for a combined HUF 164 billion. More than half of the bids was for five-year bonds although demand was high for the other two terms too. Yields for the two shorter bonds rose slightly from the previous auction held on May 5, and dropped for the ten-year series.

ÁKK sold HUF 30 billion of three-year bonds, HUF 10 billion more than planned. Primary dealers submitted bids for HUF 75.0 billion practically unchanged from the May 5 auction. Average yield was 6.48%, 5bp under the secondary market benchmark and 2bp higher than the yield at the previous auction of the bonds two weeks earlier. The range of accepted yields widened to between 6.41% and 6.50% from between 6.45% and 6.48% on May 5.

ÁKK sold HUF 22.5 billion of five-year bonds, raising its original offer by HUF 7.5 billion after dealers bid for HUF 83.5 billion. Bids were well up from an already high HUF 60.2 billion at the previous auction. Average yield was 6.86%, 4bp under the secondary market benchmark but 2bp over the yield at the previous auction two weeks earlier. Despite the increased sales, the yield range narrowed to between 6.85% and 6.87% from 6.78%-6.86% on May 5.

ÁKK sold HUF 15 billion of ten-year bonds, HUF 5 billion more than the announced amount. Offers almost tripled, to HUF 65.5 billion from HUF 22.5 billion at the May 5 auction. Average yield was 7.02%, 12bp under the secondary market benchmark and down 6bp from the previous auction of the bonds on May 5. The yield range narrowed to a tight 7.02%-7.03% from between 7.04% and 7.11% on May 5.

Demand rose up from a high HUF 158 billion at the previous auction, when ÁKK sold a combined HUF 60 billion of the three bonds instead of the originally announced HUF 45 billion at the auction itself, and sold another HUF 4.9 billion less than one fourth of the maximum available, at a non-competitive tender following the auction.