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Hungary prices bonds; issue could total $3.5 bln

Hungary placed $3.75 billion of dollar-denominated bonds, including $3 billion in ten-year bonds and $750m in 30-year bonds in a global transaction on Thursday.

The 10-year bond was priced at a spread of 310 bp over the comparable US treasuries and the 30-year bond at 330 bp over the respective US papers.

The spreads are smaller than indicated by the earlier guidance, which were about 325 bp in the case of the ten-year bonds and around 345 bp for the 30-year bonds, suggesting healthy demand for the bonds.

The ten-year spread exceeds the 265 bp spread on Hungary's last ten-year dollar bond issued in January 2010. That $2 billion bond was Hungary's last sovereign issue to date.

The 10-year issue was sold at an issue price of 99.062%, with a coupon of 6.375% to yield 6.504%. The issue price of the 30-year bond was 98.084%, its coupon is 7.625% to yield 7.791%.

Hungary's Government Debt Management Agency (AKK) announced earlier on Thursday it had mandated BNP Paribas, Citi and Deutsche Bank to organize a USD-denominated bond issuance for Hungary.

AKK did not name either the size or the maturity of the bond(s), only said that issue and pricing will be timed depending on market conditions.

The 30-year bond will be the longest foreign bond issued in Hungary's recent history.

The $3.75 billion raised compares to Hungary's plan to issue a total of EUR 4 billion bonds this year. The issues match this year's foreign expiries, including two euro denominated bonds of EUR 1 billion each, and an additional EUR 2 billion due to the European Commission in the first principal repayment on Hungary's international standby loan granted in November 2008.

Hungary’s forint firmed against both the euro and the dollar after news arrived about the successful issuance.