Hungary launches USD benchmark issuance
In the 2023 financing plan unveiled in late December, the Government Debt Management Agency (ÁKK) said it planned to issue forex bonds worth up to USD 4 billion, which was to be potentially accompanied by a billion dollars in buybacks. At that time, the date was set for the first half of the year, but the issue was apparently already in the pipeline, with the transaction starting on Wednesday.
The Hungarian government is trying to curb debt financing costs given surging inflation and high domestic interest rates.
"Hungary has mandated BNP Paribas, Citi, Deutsche Bank, Goldman Sachs Bank Europe SE and J.P. Morgan as bookrunners for a three-part USD benchmark with 5yr, 10yr and 30yr tranches," it said, without giving an indication about the planned size.
The new bonds will be priced later on Wednesday, IFR said, while ÁKK was not immediately available for comment.
Hungary said in a filing with the London Stock Exchange earlier on Wednesday that it was offering to buy back dollar-denominated bonds worth a total of more than $2.7 billion. Of course, a full buyback will certainly not be that much, as investors will not offer all the instruments.
According to a table on the debt manager's website, almost $960 million of dollar bonds will mature in February this year, followed by $1.15 billion in November, with interest rates of 5.375% and 5.75% respectively. Next year, a 10-year FX bond will mature in March. Its stock was $1.6 billion at the end of September with an interest rate of 5.375%. It is likely that these are the ones that the ÁKK is expecting investors to bid for.
ÁKK Chief Executive Zoltán Kurali said last month that the debt manager would raise the limit on the share of foreign currency debt within the total stock to 30% from the current 25%.
Kurali has said the agency would opt for a dollar bond issue as this was cheaper, while the ÁKK would also resume 3-year forint-denominated bond auctions this year.
Cover photo: Getty Images
