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Demand rises, yields fall at Hungary gov't bond auction

Hungary's Government Debt Management Agency (AKK) sold HUF 70 billion of three-, five- and ten-year bonds at an auction on Thursday, raising the announced volume by HUF 20 billion. Subcription rose sharply after the government said on Wednesday that it targets a below-3% fiscal deficit next year - a target in line with Hungary's earlier IMF and EU commitments. Auction yields fell compared to Wednesday's respective benchmarks, but were still above the previous auction.

Combined subscription rose to HUF 194.3 billion, up from a moderate HUF 88.8 billion for the same three bonds at the previous, August 26 auction where AKK sold the announced volumes.

AKK sold HUF 30 billion of the 2014/C series bonds - its current three-year benchmark bond -- HUF 10 billion more than the announced amount. Bids for the securities came to HUF 72.4 billion, up sharply from HUF 28.9 billion two weeks earlier. Average yield was 7.18% , 12bp below the 7.30% secondary market benchmark set on Wednesday but still 30bp above the 6.88% yield at the previous auction of the bonds two weeks earlier.

AKK sold HUF 20 billion of five-year 2016/C bonds, raising the announced amount by HUF 5 billion , after primary dealers submitted bids for HUF 71.4 billion, compared to their HUF 31.5 billion bids two weeks earlier. Average yield was 7.21%, 17bp under the respective 7.38% secondary market benchmark and 21bp over the 7.00% yield at the previous auction two weeks earlier.

AKK sold HUF 20 billion of ten-year bonds, HUF 5 billion more than the original offer after receiving bids for HUF 50.5 billion. Bids for the bonds totalled HUF 28.4 billion at the August 26 auction. The average auction yield was 7.35%, 12bp below the 7.47% secondary market benchmark and 30bp higher than the 7.05% average auction yield two weeks earlier. (MTI Econews)