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Hungary: Household demand for government securities increases

  Household demand for Hungarian government securities has increased over the past few days, when Hungarians purchased Ft 1 billion (about $4.6 million) in securities per day, the Finance Ministry announced on Wednesday.


Hungary’s State Treasury offers a wider range of government securities and longer opening times. The State treasury is planning to introduce online trading of securities, the announcement said.

Government Debt Management Agency (AKK) deputy CEO László András Borbély said on Tuesday that AKK will hold an extraordinary repurchase auction for two series of discount treasury bills on Monday to meet the increasing demand on the State Treasury’s retail network, told Econews on Tuesday. AKK offered to repurchase two series of discount T-bills ahead of their maturities of April 8, 2009 and June 3, 2009, on its website on Tuesday.

The reverse auction was invited after an unsuccessful auction of one of the two bill series -- the one maturing next April -- on October 20. Since AKK is only allowed to issue discount T-bills for the purpose of retail sales in the Treasury bonds through topping its auction sales, the only way to restock the bills is to repurchase them, Borbély said.

Retail investors mostly seek less-than-one-year papers at the Treasury retail branches, and they prefer discount T-bill to bonds. Demand has grown while the elimination of the primary issue of six-month discount bills in June by AKK has created a shortage.

Hungarian households invested net Ft 25 billion government securities in the first half of this year, National Bank of Hungary figures show. Their stock totaled Ft 921 billion at market prices at the end of June, including Ft 178 billion in bonds and Ft 743 billion in T-bills. According to Econews information, slightly more than 60% of the government securities held by households are papers specifically designed for retail investors. (MTI-Econews)