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Demand strong, yields drop at 3-month T-bill auction

The Government Debt Management Agency (AKK) sold the announced HUF 50 billion of three-month discount T-bills at an auction on Tuesday. Demand rose from last week's already high levels and continued well above HUF 100 billion now for the third week. Yields fell both from the previous auction on August 3 and from Monday's respective secondary market benchmark.

Subscriptions totaled HUF 134.0 billion in 119 bids, rising from HUF 118.1 billion in 119 bids bids for a lower, HUF 45 billion offer on August 3.

AKK raised its offer to HUF 50 billion for the August 10 auction after offering HUF 45 billion bills at the weekly auctions between May 25 and August 3. Demand was high, well exceeding HUF 100 billion, at the previous two auctions and AKK raised its sales from an originally announced HUF 45 billion to HUF 50 billion at both auction.

Average yield on Tuesday was 5.33%, 12bp below the three-month secondary market benchmark yield on Monday, and 10bp below the average at the previous auction. Yields in the 28 accepted bids moved between 5.30% and 5.38%. The yield range moved between 5.28% and 5.44% at the previous auction.

Three-month discount T-bill auction yields fell from 5.91% at this year's first auction on January 5 to 4.80% on April 27, then rose to hover close to 5.30% between early June and the middle of July. Auction yields rose again, to 5.47% and 5.46% at the last two July auctions after an IMF delegation left without completing a regular review of Hungary's 2008 autumn standby loan, but dropped again in August.

The secondary market three-month yield, calculated on a bill series maturing on December 15, was down 5bp from last Tuesday at 5.45% on Monday. The three-month benchmark yield was flat at 5.25% between June 8 and June 23 and has risen since.

The three-month discount T-bill auctioned on Tuesday is a new series maturing on November 17. (MTI-Econews)