Hungary’s Government Debt Management Agency (ÁKK) has held its first bond auction since a surprise rating upgrade back to investment grade by Standard & Poor’s a fortnight ago. Both the demand and the yields reflected the major change. The debt manager raised the allotted amount to the maximum on all three maturities offered and the average yields also dropped significantly.
The ÁKK has received HUF 61.6 billion worth of bids from primary dealers on a HUF 18 bn lot of 3-year government bonds, as a response to which the debt manager allotted HUF 27 bn of the instrument, the highest amount possible. The average yield was set to 1.22%, a new all-time low, 13 basis points lower than two weeks ago but 1 bp higher than yesterday’s benchmark fixing.
Primary dealers have submitted HUF 70.1 bn worth of bids on a HUF 15 bn lot of 5-yr benchmark bonds, and the ÁKK decided to allot HUF 22.5 bn of this instrument, also the maximum possible. The average yield came in at 1.81%, down 15 bps from the previous auction a fortnight ago but 3 bps above Wednesday’s benchmark fixing.
The ÁKK offered a HUF 12 bn lot of 10-yr bonds, and allotted the maximum possible (50% raise). The average yield was set to 2.85%, down 14 bps compared to the previous auction of this maturity two weeks ago. Compared to yesterday’s secondary market benchmark fixing, the average yield was 3 bps higher.
Such a large demand for Hungarian debt is unsurprising, as the sovereign credit rating upgrade by S&P likely brought a new group of investors to the market who are obliged to buy Hungarian government securities due to the tracking of benchmarks. Therefore it would not be surprising if the ÁKK could sell additional debt at the so-called non-competitive auctions in the early afternoon.
Charting is displayed using TradingView's technology, a platform, where you can build advanced charts,
spot upcoming trends in the stock screener, and find inspiration in multiple trading ideas
