Hungary may not draw this year the remainder of its €20 billion credit line from the International Monetary Fund and the European Union, but it may draw the tranche due in 2010, Government Debt Management Agency (AKK) deputy chief László András Borbély said in an interview with Dow Jones.
On Friday, Hungary became the first IMF-supported country in the EU to successfully tap global markets when it issued a €1 billion, 6.75%-coupon July 2014 five-year benchmark bond with bids totaling €2.9 billion. Hungary also sold HUF 85 billion in forint-denominated bonds, the biggest amount this year, last Thursday.
Hungary's dependence on the IMF could recede as its access to market financing increases. In the remainder of the year AKK will continue to offer the same three bonds it has been offering since the restart of bond auctions late April, Borbély said. The debt manager is also considering a shift towards foreign currency issues next year, he said.
Half of next year's issuance could be in forints with the remainder in foreign currency, with half of the foreign currency bond issuance secured against exchange rate changes through a "portfolio swap" as a possible hedge against a foreign exchange loss, Dow Jones cited Borbély as saying. Foreign-currency issuance was envisaged to have accounted for between 25% to 32% of Hungary's total debt issuance in 2008, according to guidelines set for last year, prior to the global credit crunch.
The importance of foreign currency issuance has increased for investors amid the financial market crisis because such bonds issued by Hungary are accepted as collateral by the European Central Bank while Hungarian treasuries issued in forint aren't, Borbély added. (MTI-Econews)