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UPDATE - Hungary state debt manager does not expect 2012 financing to pose problem

Hungary's Government Debt Management Agency (ÁKK) chief Gyula Pleschinger said he sees no problem with government financing in 2012, when €4.7bn in foreign exchange debt and HUF 800bn in forint bonds will expire.

The foreign exchange expiries include repayments due next year on Hungary's IMF-led international loan package signed at the peak of the international financial crisis, Pleschinger said.

Speaking on public television on Friday morning, Pleschinger said he expected Hungary to refinance the amount on the market without any problem.

ÁKK will complete the 2012 financing plan in November, he said.

Next year's foreign-exchange expiries are €700m over this year's €4bn, refinanced through USD- and EUR-denominated bond issues during the spring.

The forint expiries will be HUF 300bn lower than this year, he said.

ÁKK's policy is to smooth out debt repayments, issuing when the market is receptive and repurchasing papers whose expiries are nearing.

Financing will probably be tighter until 2016, when Hungary's IMF-led package will be fully repaid, and easier thereafter.

Pleschinger said the government's plan to cut gross government debt as a percentage of GDP from a projected 73% at the end of this year to 72% by end of 2012 was realistic, noting that exchange-rate changes may affect the actual rates.

Pleschinger said he saw very little chance for a downgrade of Hungary's sovereign credit rating and he would bet instead on an improvement in the outlook from negative to stable.

If looking into fundamentals, credit rating agencies will see that Hungary's state debt in decreasing, it is repaying its IMF loan, the government is committed to its debt and deficit goals, and has the means to achieve them, he said.

Hungary is trying to expand its investor base with new markets, he said when asked about moves to include China and, most recently, Saudi Arabia among the buyers of Hungarian government securities.

"There have been some steps forward", Pleschinger, who was part of a recent government delegation to Riyadh, said when asked about the Saudi prospects. He added that the Saudi investors are conservative and cautious, and would wait for smaller projects and successes before returning to the bigger issues of financing.

Asian investors have appeared among the buyers of Hungary's big spring foreign bond issues, he said, adding that Hungary continues to rely primarily on its traditional investors, meaning Europe, the US and, to a lesser extent, Japan.