Hungary's government debt manager AKK sold the originally announced HUF 14 billion nominal value of 2023/A government bonds in exchange for bonds due in 2011 and 2012 at a bond exchange auction on Wednesday. Demand for the 15-year bonds totaled HUF 24 billion, slightly more with payments in the shorter bond. The bonds sold at yields 2-7bp above the 15-year benchmark.
This was the first exchange auction for such long bonds, and the average yield gap - the premium offered for exchanging short bonds for longer ones - was 142 basis points if the 15-year bonds were paid for with one-year 2011/B bonds and was 73bp if paid for with the two-year 2012/C bonds.
AKK sold the announced HUF 7 billion of the nine-year bonds on offer against HUF 6.3 billion 2011/B bonds after receiving bids for HUF 12.8 billion. The debt manager sold another HUF 7 billion of 2023/A bonds against payment with HUF 6.4 billion of 2012/C bonds. Bids with payment with the two-year bond totaled HUF 11.2 billion.
The 2023/A bonds sold at an average yield of 7.08% whether paid with 2011/B bonds or 2012/C bond, and accepted yields ranged from 7.06% to 7.11% as compared to the 7.04% 15-year secondary market benchmark on Tuesday.
AKK calculated the 2011/B bonds as payment at a price equal to a yield of 5.66% (the same as at the previous exchange auction of 2019/A bonds held a week earlier) while it calculated the 2012/C bonds as payment at a yield of 6.35%, the former above the 5.55% one-year benchmark yield and the latter below the closest, 6.77% three-year benchmark.
The 2023/A bonds offered at the Wednesday exchange auction, first issued in January 2007, were last auctioned in July, and mature on November 24, 2023. They carry a 6.00% coupon, and the volume outstanding on the market will rise to HUF 256 billion, Econews calculated based on AKK figures for June 30.
The 2011/B bonds, accepted as payment, were issued first in January 2006. They carry a 6.00% annual coupon and will expire on October 12, 2011. The volume outstanding of the series will drop to HUF 346 billion on settlement of the current auction.
The 2012/C bonds were first issued August 2007, carry a fixed 6.00% annual coupon and will expire on October 24, 2012. The volume outstanding will decline to HUF 443 billion.
AKK offered a shorter bond, the 2014/C, at its five exchange auctions between the launch of such auctions last November and April 28. After a three-month break it offered and sold a combined HUF 20 billion of 2019/A bonds against 2011/B and 2012/B bonds on August 4. Bids totaled HUF 35.5 billion at last Wednesday's exchange auction. (MTI-Econews)