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ÁKK cuts three-month T-bill auction sales, yields rise

The weekly auction of three-month discount T-bills by Hungary's Government Debt Management Agency (ÁKK) was moderately oversubscribed. ÁKK cut the sales, but yields still rose sharply.

The auction was the first one after an undersubscribed auction of 12-month T-bills last Thursday.

ÁKK receiving HUF 51.7bn bids for the announced HUF 40bn three-month discount T-bills on Wednesday,and cut sales to HUF 30bn. Bids for the same volume offered and sold totalled HUF 62.8bn at the previous auction on October 25.

Average yield at the auction was 6.30%, 20bp lower than the secondary market benchmark, calculated on bills expiring on March 7 next year, and 25bp higher than the average yield at the previous auction.

The yield range widened sharply further, to between 6.05% and 6.45% after narrowed to between 5.90% and 6.08% one week earlier.

The bills auctioned are due on February 8, 2012. The weekly auction was held on Wednesday instead of Tuesday because the latter was a holiday.

The debt manager raised the announced per-auction volume by HUF 10bn to HUF 40bn for the previous auction after reducing it to HUF 30bn from HUF 50bn at the September 27 auction when it started offering three-month bills expiring in 2012.

Demand at the three-month discount T-bill auctions has dropped under earlier levels since the beginning of October, when the average three-month auction yield surpassed 6% for the first time since late 2009.

At the 12-month T-bill auction last Thursday ÁKK refused all the HUF 22.8bn bids it received for a HUF 40bn offer. It sold, however, the announced HUF 5bn of five-year floating rate bonds which were little less than 1.5 times oversubscribed.