Forint Gains, Hungary Bond Risk Falls on IMF Aid Outlook

The forint gained and the cost to protect against a default by Hungary fell to a 14-month low after Prime Minister Viktor Orban said Hungary isn’t far from a “good” agreement with the International Monetary Fund on aid.

The currency appreciated 0.2 percent to 281.45 per euro by 12:07 p.m. in Budapest, extending this week’s advance to 0.6 percent. Credit-default swaps slid three basis points to 300, the lowest since July 2011. Yields on the government’s benchmark 10-year bonds basis dropped 15 basis points, or 0.15 percentage point, to 6.92 percent.

There is a “good chance” for an agreement with the Washington-based lender, which is aimed at reducing Hungary’s financing costs, Orban said today in an interview with state-run MR1 radio. The aid talks have dragged on for almost a year as the government insists on a precautionary credit line that doesn’t carry the same conditions attached to an IMF standby loan, government spokesman Andras Giro-Szasz told TV2.

“Hungary’s improving risk perception is mainly to do with the points of view closing in on an agreement,” Imre Kerekgyarto, a Budapest-based trader at Commerzbank AG, wrote in an e-mail today.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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