Hungary Hires Banks as Foreign Currency Bond Sale Looms

Hungary hired banks for meetings with bond investors in the U.S. and Europe as the country prepares to sell notes on international markets for the first time in 20 months.

The Debt Management Agency, known as AKK, picked BNP Paribas SA, Citigroup Inc., Deutsche Bank AG and Goldman Sachs Group Inc. to arrange meetings “in the coming weeks,” the agency said in an e-mailed statement today. The forint appreciated 0.2 percent to 295.25 per euro by 6:18 p.m. in Budapest after falling as much as 0.9 percent today.

Hungary, which last sold Eurobonds in May 2011 and is due to repay 5.1 billion euros ($6.8 billion) in foreign-currency debt this year, plans to issue 4 billion euros to 4.5 billion euros on the international markets in 2013, the agency said in a separate e-mailed statement today. The agency seeks to sell notes “as soon as possible,” Deputy Chief Executive Officer Laszlo Andras Borbely told reporters in Budapest on Dec. 20.

“It would have been really hard to survive another year based on forint issuance only,” Viktor Szabo, who helps manage about $10 billion in emerging-market debt at Aberdeen Asset Management, wrote in e-mailed comments today. “It’s important to help ease the pressure on the forint bond market.”

Yield Impact

The yield on Hungary’s euro notes due in 2020 rose three basis points, or 0.03 percentage point, to 4.92 percent today, the highest since Jan. 2. Yields on forint-denominated notes due in 2022 fell one basis point to 6.26 percent after a 16 basis point increase on Jan. 11.

The AKK raised its offer of euro-denominated inflation-linked bonds due in 2015 and sold under Hungarian law to 1 billion euros from 600 million euros on Jan. 11. With most of that sale already snapped up by today by Hungarian businesses and households, the agency said it will sell a new note due in 2016 that is linked to euro-area inflation, without specifying the size.

The inflation-linked bonds “can’t replace entering international capital markets,” the agency said today. “The AKK will determine the timing and currency type of capital market issuance based on the market environment.”

Before it's here, it's on the Bloomberg Terminal.