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ÁKK rejects all bids again at bond exchange auction

Demand was little more than the offer and Hungary’s Government Debt Management Agency (ÁKK) refused all the bids it received for exchanging bonds maturing in 2013 for a bond maturing in 2019 on Wednesday. The auction was the second unsuccessful bond exchange auction in a row.

The previous exchange auction held on September 14 was undersubscribed, and ÁKK refused all the bids received.

ÁKK offered HUF 5bn of 2019/A bonds in exchange for 2013/D bonds and another HUF 5bn in exchange of 2013/E bonds. It halved the offer from the previous, undersubscribed exchange auction on September 14, when ÁKK refused all the bids received.

Demand for acquiring 2019/A bonds in exchange of 2013/D bonds totaled HUF 6.5bn and bids for exchanging 2013/E bonds for 2019/A bonds totaled HUF 6.1bn.

The debt manager announced Wednesday morning that it would calculate the 2013/D at a yield of 7.18% when used in payment, and would calculate 2013/E bonds as payment at a 7.27% yield.

The closest, 3-year secondary market benchmark, calculated for 2014/D bonds, was 7.60% on Tuesday.

Demand for the HUF 10bn-10bn of 2020/A bonds offered totaled HUF 4.4bn in exchange for 2013/D bonds and totaled HUF 4.l1bn if paying with 2013/E bonds.

At the last successful exchange auction on August 17, ÁKK sold the announced combined HUF 16bn of 2019/A bonds in exchange of the same two bonds at an average yield of 7.23%. Combined demand at the August 17 auction totaled HUF 39.3bn.