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Hungary debt manager plans small net forint repayment in Aug-Oct

Hungary's Government Debt Management Agency (ÁKK) plans net forint repayments of HUF 42.8 billion in August-October, most of it in discount T-bills, ÁKK's latest three-month forint issue plan revealed.

Gross issues will come to HUF 1,193 billion and repayments to HUF 1,236 billion during the period.

Bond auction offers will probably stay at or slightly rise from recent levels while discount T-bill auction offers will be reduced, the issue plan suggests.

Beside six biweekly bond auctions, ÁKK plans three bond exchange auctions in the period, and will also offer floating-rate bonds parallel with every second 12-month discount T-bill auction. The debt manager plans four reverse auctions in August and September.

ÁKK plans gross bond issues of HUF 350 billion and bond repayments of HUF 352 billion, including one large expiry ─ of HUF 282 billion of 2011/B bonds on October 12 ─ and buying back HUF 40 billion bonds early at reverse auctions in the period. The issues-expires include HUF 30 billion bonds which are planned to be switched into longer-term ones at the exchange auctions in August-October.

The longest, 15-year fixed-rate bond is scheduled to be auctioned twice, on August 25 and on October 20 during the period. Floating-rate bonds will be offered four times, on August 4, September 1, September 29 and on October 24. ÁKK has regularly auctioned floating-rate bonds together with twelve-month bills once a month since October 2010.

The HUF 520 billion offer of three-month discount T-bills will be below the HUF 650 billion expiries during the period and indicates a cut in the per auction offers, to HUF 40 billion from HUF 50 billion offered since the end of February.

ÁKK will probably also cut the offer at the biweekly twelve-month discount T-bill auctions as it plans to sell a combined HUF 30 billion of the bills at the seven auctions in the period. This translates to an average below the HUF 50 billion offered stably so far this year. There will be just one big twelve-month discount T-bill expiry, of HUF 210 billion bills on September 21, in the period.

The tentative target for twelve-month interest-bearing T-bill sales is HUF 22.9 billion during the period. As usual, the sales target of these bills, designed for retail investors, matches the expiring volume.