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City to cover cost of bath with €1.3 billion bond issue

The city of Bonyhád (SW Hungary), expects a HUF 1.3 billion municipal bond issue it made in 2007 to cover most of the cost of a thermal bath it is building, deputy-mayor Szilárd Varga told MTI.

The city decided to organize financing itself for the spa because development grants are only available for the renovation of operating baths, Varga said.

Interest on the 20-year bond was calculated at HUF 621 million at the time of issue, with the city seen paying HUF 36 million in interest in 2008 and HUF 49 million in 2009. However, as the bond is denominated in Swiss francs, interest payments have likely grown, Varga said.

The forint has weakened sharply against the Swiss franc since 2007.

The bonds were subscribed by OTP Bank. (MTI – Econews)