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Bill would clear way for issue of debt linked to state

A bill submitted to Parliament on Thursday would allow the National Asset Management Company (MNV) to issue securities "connected to financial assets owned by the state".

The minister responsible for the general government and the minister responsible for state assets - the economy and the development ministers - would, this year, authorise MNV to issue the debt, according to the text of the bill submitted by Parliament's budget committee.
The bill would also exempt the transaction from a rule that subjects contracts on state assets exclusively to Hungarian law and puts them solely in the jurisdiction of the Hungarian courts.
There is a precedent for such a transaction: in 2004, Hungary's government raised HUF 159 billion in a sale of five-year bonds exchangeable for a 25% state-owned stake in drugmaker Richter. Five years later, MNV exercised a repurchase right and raised €833 million in another issue of exchangeable bonds to refinance the earlier issue.
At present, the Hungarian state's single biggest holding in a listed company is a 21.2% stake in oil and gas company MOL which it acquired for €1.88 billion from Russian energy company Surgutneftegas last year.
National Economy Minister György Matolcsy said in a response to a question by an opposition MP early in November that there were no plans to sell the state's stake in MOL but noted that an eventual use of the shares to draw on funding did not necessarily involve their sale.
Matolcsy said the government's purchase of the stake was a "strategic investment", but also acknowledged that the blue-chip shares served as a "strategic financial reserve".
"The purchase of the stake was a strategic investment, at the same time serving - as a liquid blue-chip share - as a strategic financial reserve," he said. "If, for example, a deterioration in the external environment would cause financing difficulties, sources could be drawn in relatively cheaply with the help of the shares," he added.