Hungary to Sell Eurobond as IMF Aid Quest Ending, Orban SaysAndras Gergely and Edith Balazs
Hungary plans to sell bonds on the international market by the beginning of next month as efforts to obtain aid from the International Monetary Fund are coming to an end, Prime Minister Viktor Orban said today.
The IMF has declined to provide the flexible credit line that the government requested, Orban said in Brussels. Hungary, which turned to the IMF for help in November 2011, doesn’t need a bailout as it can finance itself from the market, he said.
The government last sold Eurobonds in May 2011, having scrapped a planned issue last year on expectations an IMF deal would cut borrowing costs. Even though IMF talks stalled, the yield on Hungary’s 2021 dollar bonds has plunged to 4.8 percent from 9.37 percent in January 2012 amid improved confidence in Hungary’s ability to cut public debt and increased demand for higher-yielding assets.
“We’ll go out to the market again probably this month or the beginning of the next month,” Orban said.
Hungary began investor meetings this week in the U.S. and Europe organized by BNP Paribas SA, Citigroup Inc., Deutsche Bank AG and Goldman Sachs Group Inc. The Debt Management Agency has also raised more than 1 billion euros from inflation-linked notes sold under Hungarian law.
Hungary plans to raise 4.5 billion euros from the international debt market this year and “would presumably hope to take care of at least a third of that amount with any bond issue that follows the current roadshow,” Blaise Antin, who helps manage about $10.5 billion of emerging-market debt at TCW Group Inc. in Los Angeles, said by e-mail yesterday after attending one of the meetings.
Market conditions permitting, it would make most sense for Hungary to sell 10-year bonds as it currently has no maturities between 2021 and 2041, Antin said.
The forint gained 0.3 percent to 294.88 p.m. in Budapest, extending the advance in the past two days to 1.1 percent, the best performance among more than 20 emerging markets tracked by Bloomberg.
Orban’s comments on the Eurobond issuance were “positive” as they helped dispell uncertainty about Hungary’s funding plans, Zoltan Torok, a Budapest-based economist at Raiffeisen Bank International AG, wrote in an e-mailed report.
“We had doubts whether the government would go for it,” Torok said.