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AKK mandates banks for eurobond issue

Hungary's Government Debt Management Agency (AKK) on Thursday mandated Citigroup and ING Bank to organize a benchmark euro-denominated bond issue for the Republic of Hungary, the Finance Ministry told MTI.

AKK will use the proceeds from the issue for general financing, the ministry said.

The mandate is for a five-year bond, Reuters reported from London, citing an official of one of the lead managers as a source.

The bond will be Hungary's first sovereign foreign issue in more than one year and Hungary will tap foreign markets for the first time since the global crisis.

Hungary last issued a €1.5 billion ten-year euro bond in June 2008. Offers for the bond, bearing a 5.75% annual coupon, came to €3 billion, and it was issued at a price of 99.54% or at a spread of 98 base points over mid-swaps. The issue was lead managed by the organizers of the current issue and BNP Paribas SA.

Before the ten-year euro bond, Hungary issued a 150 million Swiss franc five-year bond and a 200 million Swiss franc eight-year bond in May last year. The five-year bond carries a fixed annual coupon of 3.5% and the issue price was 100.197%. The eight-year bond, bears a fixed 4% annual coupon and was issued at 100.461%. The bonds were priced at 50 base points and 76 base points, respectively, over the CHF Libor. (MTI-ECONEWS)