Hungary’s Government Debt Management Agency (ÁKK) recorded major interest for government bonds at its biweekly auction on Thursday, yet it has raised the allotted volume only slightly. The average yields, however, dropped considerably, except at the longest maturities.
The ÁKK has received a whopping HUF 110 bn worth of bids from primary dealers on a HUF 18 bn lot of 3-year government bonds, which corresponds to the largest demand in almost a year. However, it allotted “only" HUF 25 bn of the instrument, instead of the maximum possible (+50%, HUF 27 bn). The average yield was set to 1.15%, a new all-time low and 21 basis points lower than two weeks ago but 1 bp over yesterday’s benchmark fixing.
Primary dealers have submitted HUF 45.4 bn worth of bids on a HUF 15 bn lot of 5-yr benchmark bonds, and the ÁKK decided to allot the original amount on offer. The average yield came in at 1.78%, 14 bps lower compared to the previous auction a fortnight ago but 6 bps higher than Wednesday’s benchmark fixing.
The ÁKK offered a HUF 10 bn lot of 15-yr bonds, for which it received HUF 17.6 bn worth of bids, resulting in an allotment of HUF 10 bn. The average yield was set to 2.97%, up 12 bps compared to the previous auction of this maturity a month ago, and 1 bp over yesterday’s secondary market benchmark fixing.
Overall, the ÁKK sold HUF 50 bn worth of bonds today, against the originally planned HUF 43 bn, although it could have sold a lot more in view of demand. This also suggests that approaching the end of the year financing of the state is secured so much that no further intensive fund raising is necessary. The ÁKK will also hold non-competitive tenders of the same maturities in the early afternoon where it could sell a few billion forints more of the instruments.
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