April 23, 2020 / 5:42 PM / a month ago

UPDATE 1-Hungary sells 2 bln euros of fx bonds as financing need jumps

(Adds detail)

By Marton Dunai

BUDAPEST, April 23 (Reuters) - Hungary has sold 2 billion euros worth of 6-year and 12-year foreign currency bonds to cover a surge in financing needs due to the coronavirus pandemic.

The country’s debt agency said 1 billion euros of 6-year bonds with a 1.125% coupon were priced at mid-swaps plus 145 basis points, while 1 billion euros of 12-year paper with a coupon of 1.625% were priced at 180 bps over mid-swaps.

The Finance Ministry added that the yield of the 12-year paper was “more favourable” than that of a 10-year bond issued in 2017, without giving further details.

The amount accounts for half of a 4 billion euro ($4.32 billion) foreign currency bond issuance plan, increased this year from an original target of 1 billion euros as the budget deficit grows along with the economic fallout from the coronavirus crisis.

Prime Minister Viktor Orban’s government has curbed reliance on foreign investors and boosted government debt sold to retail investors.

The AKK government debt agency on Wednesday said that the funding requirement of the 2020 budget had more than quadrupled to 1.6 trillion forints ($4.9 billion).

The AKK also nearly doubled the planned volume of gross forint-denominated bond issuance to institutional investors.

The agency said its medium-term goal of increasing the stock of debt held by households to 11 trillion forints by the end of 2023 remained intact.

The AKK also said it was sticking to its other strategic goals of increasing the average term to maturity and keeping the share of foreign currency debt at low levels. (Reporting by Marton Dunai; Editing by Kirsten Donovan)

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