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AKK to auction 15-year bond for short bonds, modifies mix for cash this week

Hungary's government debt manager AKK will offer HUF 14 billion of nominal value government bonds due in 2023 in exchange for bonds expiring in 2011 and 2012 at a bond exchange auction on Wednesday. In a separate move, AKK has shifted the composition of its usual HUF 50 billion auction mix towards longer maturities, offering fewer 3-year and more ten-year bonds for the Thursday bond auction.

At Wednesday's exchange auction, AKK will auction HUF 7 billion 2023/A bonds – the current 15-year benchmark bond – in exchange for 2011/B bonds and another HUF 7 billion of 2023/A bonds in exchange for 2012/C bonds on Wednesday. AKK will announce the price at which the shorter bonds will be calculated as payment early on Wednesday, before the auction.

The exchange auction follows a successful similar auction last Wednesday where the debt manager offered and sold a combined HUF 20 billion of 2019/A bonds in exchange for 2011/ and 2012/B bonds. AKK had offered a shorter bond: 2014/C bonds – which recently became the three-year benchmark bond – at its previous exchange auctions held between November and late April.

At its regular bond auction on Thursday, AKK will offer HUF 20 billion of 2014/C bonds, the new three-year benchmark, cutting its three-year offer by HUF 5 billion compared to earlier. It will offer the usual HUF 15 billion of five-year 2016/C bonds and HUF 15 billion – HUF 5 billion more than usual – of ten-year 2020/A bonds.

The 2014/C bonds were first issued in June 2003, they have a 5.50% coupon and will expire on February 12, 2014. The outstanding stock on the market was HUF 480 billion on June 30. They replace as benchmark the 2013/E bonds which are five and half months shorter.

The 2023/A bonds offered at the Wednesday exchange auction, first issued in January 2007, were last auctioned in July, and mature on November 24, 2023. They carry a 6.00% coupon, and the volume outstanding on the market is HUF 242 billion, Econews calculated based on AKK figures for June 30.

The 2011/B bonds, accepted as payment, were issued first in January 2006. They carry a 6.00% annual coupon and will expire on October 12, 2011. The volume outstanding of the series is HUF 353 billion.

The 2012/C bonds were first issued August 2007, carry a fixed 6.00% annual coupon and will expire on October 24, 2012. The volume outstanding is HUF 450 billion. (MTI-Econews)