Equity 26 January 2021, 12:00pm

Hungarians' gov't security holdings swell by 1 trillion forints in 2020

Portfolio

Although the stock of retail government securities grew by only 98 billion forints in 2020 due to maturities, the expansion on retail accounts exceeded HUF 1 trillion. The latest figures reaffirm the already clear dominance of the Hungarian Government Security Plus (MÁP+), a.k.a. 'superbond', but demand for inflation-linked instruments was also substantial in the last few months of 2020. In the following you find a couple of interesting charts on how retail government securities fared last year.

HUF 98 billion growth in annual terms

The latest data reaffirm preliminary estimates published by the Government Debt Management Agency (ÁKK) earlier. At the end of 2020, the stock of retail government securities reached HUF 9,171 billion, which corresponds to a HUF 98 billion increase over 2019.

The coronavirus outbreak in the spring marred demand for retail government securities, and the stock fell in April to almost HUF 8,800 bn which corrected back in the remainder of the year despite massive maturities.

The sizeable maturities occurred in the holdings of institutional investors (they are no longer allowed to buy retail debt instruments and the stock of gov't securities held by them fell HUF 972 bn in 2020 to HUF 339 bn) which let the stock held by households grow by more than HUF 1,000 billion year on year. Most of this growth went into MÁP Plus.

Highlights of retail government securities from 2020:

Most demand for retail papers were focused on MÁP+. The superbond stock rose by HUF 1,826.2 billion to HUF 4,962.2 by the end of December. The stock of printed MÁP+ grew by HUF 198.9 bn yr/yr to HUF 259 bn. This also shows that almost the entire growth in the stock of retail government securities held by households owed to MÁP+ last year.
Due to sizeable maturities at institutional investors and buybacks from distributors, the stock of Premium Hungarian Government Security (PEMÁK) declined by HUF 208.4 bn to HUF 2,310 bn last year. We should also note, however, that the inflation-linked instrument fared rather well in the last quarter of 2020 and its stock grew by more than HUF 40 bn every month as of September.
The stock of the Bonus Hungarian Government Security (BMÁP, no longer available) dropped HUF 390 billion to HUF 61.5 bn.
The stock of the 2-year Hungarian Government Security (also not sold anymore) decreased by HUF 155.8 bn to HUF 59.4 bn in 2020.
1-year Hungarian Government Security holdings amounted to HUF 1,088.4 billion on 31 Dec, which marks a contraction of HUF 1,069.7 bn over the end of 2019. Besides the maturities of institutional holdings, the drop was caused by the fact that retail investors used the proceeds from their maturities to buy MÁP Plus.

The change in the stock of select government securities is shown on the chart below.

HUF 340 bn worth of institutional money left in retail gov't securities

Last year, the ÁKK bought back nearly HUF 900 bn worth of retail government securities from the distributing banks, leaving some HUF 340 bn in institutional hands.

Just like in 2020, the ÁKK expects retail government holdings to grow by about HUF 1 trillion in 2021, as well, in parallel with which HUF 2,355 bn worth of papers will reach maturity. Larger maturities are due in PMÁP (Premium Hungarian Government Security) which should reduce the retail government security holdings of institutional investors to a negligible level this year.