BUDAPEST (Reuters) - Hungary plans to launch a new three-year euro-denominated government bond with a floating interest rate aimed primarily at ordinary Hungarians, the government debt management agency (AKK) said on Thursday.
Budapest, still wrangling with the International Monetary Fund over a financing deal that analysts say is needed to bring its borrowing costs back down to manageable levels, has not tapped international markets so far this year.
The AKK said it planned to sell 200-300 million euros worth of new bonds initially and the new paper, which will be added to a range of forint government securities already available to domestic retail buyers, would be launched in the coming weeks.
The new bond will pay a 2.5 percent premium above the average euro zone inflation rate published by Eurostat, the AKK said, adding that the bonds would not replace normal foreign currency bond issuance aimed at international capital markets.
“The AKK targets primarily retail buyers with the new government paper, but it also intends to give a possibility to corporate buyers as well to buy the papers,” the AKK said.
AKK officials reiterated that the government planned to tap international markets only after a deal is reached with the IMF and European Union.
Hungary, which first asked for financial assistance from the IMF in November 2011, started talks with lenders in July after months of delays.
It expects to resume talks in coming weeks, but many market players believe the government is only playing for time, and wants to avoid an agreement if possible.
Reporting by Krisztina Than; editing by Patrick Graham