April 22, 2020 / 9:54 AM / 2 months ago

UPDATE 1-Hungary to boost bond issuance as budget deficit grows

(Adds detail)

By Krisztina Than

BUDAPEST, April 22 (Reuters) - Hungary plans to issue 4 billion euros ($4.4 billion) of foreign currency bonds this year to help to finance an increased budget deficit, tapping international markets for the first time since 2018 as it grapples with the economic fallout from the coronavirus crisis.

The AKK government debt agency on Wednesday said that the funding requirement of the 2020 budget increased to 1.601 trillion forints ($4.9 billion) from the 367 billion forints set out in the original issuance plan.

In recent years Prime Minister Viktor Orban’s government has curbed reliance on foreign investors and boosted government debt held by retail investors.

Hungary had originally planned to issue up to 1 billion euros of foreign currency debt, focusing on domestic retail investors and Japanese yen and Chinese yuan markets.

On Wednesday the AKK mandated Citigroup, ING and J.P. Morgan to arrange a benchmark-size eurobond issue. It did not disclose details on timing or the exact size of the issue.

Hungary last issued a eurobond in September 2018.

The AKK has also raised the planned volume of gross forint-denominated bond issuance to institutional investors by 1.652 trillion forints to 3.669 trillion forints for this year and said it was primarily building on the weekly three-year and five-year bond auctions while sustaining and carefully increasing issuance of 10, 15 and 20-year government bonds “in line with market conditions”.

The agency said that 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. ($1 = 326.2800 forints) ($1 = 0.9206 euros)

Reporting by Krisztina Than Editing by David Goodman

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