UPDATE 1-Hungary resilient to market turmoil over Brexit risk -debt agency CEO

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BUDAPEST, June 15 (Reuters) - Hungary’s AKK debt agency has a financing buffer worth about 1 percent of GDP it could deploy if shocks such as a British exit from the EU were to spark turbulence in global markets, its chief executive told Reuters on Wednesday.

Gyorgy Barcza said Hungary’s forint and government bonds were likely to remain generally resilient and that it planned over time to sell more yuan-denominated debt after becoming the first Central European country to do so in April.

“Yields have been fairly stable so far, and we saw strong demand at last week’s auction,” he said when asked in an interview about potential risks arising from Britain’s June 23 referendum on whether to remain a member of the European Union.

“The forint’s exchange rate has been fairly stable as well, so we think the Hungarian market has been resilient to global market turbulence and ... this is expected to remain the case.”

Barcza said this week’s roughly 1 percent fall in the value of the Hungarian forint was “not significant” and that domestic market volatility was not higher than elsewhere in central Europe.

Barcza said the AKK had built up the financing buffer of around 300 billion forints ($1.07 billion) from forint-denominated issuance this year and will decide how to use it in light of any market risks that emerge.

He also said issuance of any foreign currency bond this year was “a possibility but not a priority” for Hungary, which has worked to curb reliance on external sources of financing over the past years with more issuance to domestic buyers.

Hungary did not tap international bond markets in 2015. Instead, it has increased government debt sales to households and local banks under a programme begun by the central bank.

In its financing plan for 2016, the AKK has pencilled in international foreign currency bond issues worth roughly a billion euros, which includes its 1 billion yuan sovereign bond.

Barcza said Hungary planned to slowly build up its presence in Chinese debt markets over the next five to 10 years, so it could issue there on a regular basis, and that another yuan-denominated bond this year was possible.

Barcza said this could be a “Panda” bond, issued on the onshore Chinese market.

“I would not rule out this possibility, but a lot will depend on regulatory authorities as the onshore bond market in China is a strongly regulated market,” he said.

$1 = 279.46 forints Editing by Catherine Evans