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Demand large, yields high at six-week T-bill auction

Demand was more than double at a six-week "liquidity" T-bills auction on Monday and the Government Debt Management Agency (AKK) sold the announced volume as yields were well above both the central bank base rate and the closest three-month secondary market benchmark.

The auction was the first one since the Hungarian government announced on Thursday afternoon its intention to reach an agreement with the International Monetary Fund. It followed an unsuccessful liquidity bill auction one week earlier.

AKK offered and sold HUF 50bn of the bills that will expire on December 28, after primary dealers bid for HUF 117.5bn.

The average yield came to 6.63% at the auction.

The closest, three-month secondary market benchmark, calculated at a bill expiring on March 7, 2012, was 6.48% on Friday.

The yield was well up from the 6% yield of the central bank’s two-week zero-coupon bond which is also the National Bank of Hungary’s (NBH) base rate. At the previous successful auction on November 7, AKK received HUF 80.2bn bids, and sold the announced HUF 50bn bills yet at an average yield of 6.07%.

Last Monday AKK held an unsuccessful liquidity bill auction, accepting none of the HUF 35.7bn bids it received for the same HUF 50bn offer.