The National Bank of Hungary (MNB) purchased a combined HUF 50 billion government bonds, the offered amount, of four bond series from primary dealers at an auction on Moday. Yields, where comparable, were down compared to a week earlier.
Offers to sell came to HUF 112.04 billion, half of it for the sale of 2012/C bonds. Primary dealers’ demand to sell rose considerably from a week earlier at the auction, the first one after a downgrade of Hungary’s sovereign rating by Moody’s on Friday and by Fitch on Monday.
The MNB bought HUF 10.95 billion 2009/F bonds, HUF 0.95 billion more than offered at an average yield of 12.90% at the auction. The average yield fell 12 basis point (bp) from the November 3 auction. Primary dealers offered to sell HUF 23.08 billion of the bonds. Accepted yields varied between 12.76% and 12.96%. The one-year benchmark yield, calculated on a discount T-bill maturing on September 23, was 11.51% on Monday, up 5bp from Friday. The MNB sold HUF 5 billion of 2010/C bonds, the offered amount after receiving selling offers of HUF 15.23 billion. Accepted yields varied between 12.74% and 12.91%, down 21bp from a week earlier.
Primary dealers offered to sell HUF 29.04 billion of 2012/B bonds and actually sold HUF 14.25 billion of them as the MNB reduced its original offer slightly, from HUF 15 billion. Auction yields varied between 12.30%-12.65% and averaged 12.42%.
The Bank bought HUF 19.8 billion of 2012/C bonds against its original offer of HUF 20 billion, after receiving HUF 54.64 billion offers to sell the bond. Yields ranged between 12.05% and 12.52% and averaged 12.30%. The five-year benchmark yield, calculated on the same bond was 12.37%, up 49bp from Friday. Neither 2012/B or 2012/C bonds were up for the purchase auction on November 3.
Demand to sell rose considerably from a week earlier when the MNB offered to purchase HUF 30 billion bonds but bought only HUF 23.56 billion due to weak interest in selling either 2010/C or 2011/C bonds. The MNB offered and bought HUF 50 billion worth bonds at the preceding two auctions.
The auction is the fourth one of regular weekly auctions introduced as part of an agreement between the MNB and primary dealers announced on October 16. The agreement aimed at boosting liquidity of government securities market. (MTI-Eco)