Economy
Hungary bond buyback auction attracts deluge of offers
The issuer had a repurchase limit of HUF 5 billion for each of the three series, yet none of the HUF 13 billion worth of 2014/D bonds offered were repurchased. Of the 2015/A series, HUF 4.2 billion was accepted of HUF 18.1 billion worth of offers at 2.94% yield.
The third series (2015/C) attracted a deluge of offers totaling HUF 86.8 billion, of which the issuer accepted only HUF 16.7 billion at 3.19% yield.
It should be noted that in late October almost HUF 600 billion of the 2015/C bonds were in circulation. In light of this figure, the amount of repurchase offers is still unusually high. This is most probably due to the decline in yields (i.e. increase in price) since the bonds were issued. One of the aims of the State Debt Management Agency repurchase auctions is to lower the amount of outstanding government debt at the end of the year (in order to lower the debt rate as a percentage of GDP). However, there are clear signs that the agency is not willing to do so at all costs, i.e. it is reluctant to buy back huge amounts of bonds on unattractive terms.
The third series (2015/C) attracted a deluge of offers totaling HUF 86.8 billion, of which the issuer accepted only HUF 16.7 billion at 3.19% yield.
It should be noted that in late October almost HUF 600 billion of the 2015/C bonds were in circulation. In light of this figure, the amount of repurchase offers is still unusually high. This is most probably due to the decline in yields (i.e. increase in price) since the bonds were issued. One of the aims of the State Debt Management Agency repurchase auctions is to lower the amount of outstanding government debt at the end of the year (in order to lower the debt rate as a percentage of GDP). However, there are clear signs that the agency is not willing to do so at all costs, i.e. it is reluctant to buy back huge amounts of bonds on unattractive terms.
