Financing from the market could increase more if a tentatively planned foreign issue – not included in the plan which covers domestic issuance only – materialises. Otherwise Hungary will still use the IMF, EU and World Bank standby agreement to finance HUF 500bn in net expiries along with the fiscal deficit for the period. AKK plans net discount T-bill issues of HUF 111bn and negative bond issuance of HUF 609bn in August-October. Rising bond auction sales — to an average HUF 30bn combined per auction — will stand against two large bond expiries of almost a combined HUF 430bn and early bond repurchases of HUF 60bn in August-October. (After repayments in H1, no foreign bond is due in the second half of the year.)

AKK plans…

AKK plans to issue gross HUF 905bn of three- and twelve-month discount T-bills in August-October, compared to expiries of HUF 794bn, meaning net issues of HUF 111bn (as against planned net discount T-bill repayments of HUF 185bn in July-September). It will issue gross HUF 625bn of three-month discount T-bills as against HUF 614bn of expiries, and HUF 280bn of twelve-month T-bills, compared to HUF 180bn of expiries. AKK plans to offer on average HUF 48bn of the three-month bills per auction (instead of HUF 40bn in the July-September plan and against a recently offered HUF 50bn) and an unchanged HUF 40bn of twelve-month bills (against HUF 50bn at the latest auction). Three-month bill auctions are held weekly and twelve-month bills are auctioned every other week.

What AKK deputy head said?

The August-October issue plan contains gross bond issues of HUF 180bn, compared to bond expiries of HUF 790bn, including a small HUF 1.8bn expiry of 2009/A bonds and a HUF 404.5bn expiry of 2009/F bonds, both on August 12, as well as an expiry of HUF 323.6bn of 2009/D bonds on October 12. Bond auctions will continue to be held every other week. The per auction sales volume is HUF 30bn according to the issue plan, double the tentative HUF 15bn in the July-September plan. The target is still conservative compared to the last bond auction on July 2, when AKK sold a combined HUF 41.7bn of bonds, selling HUF 31bn bonds at the auction and another HUF 10.7bn at the non-competitive tender held following the auction. AKK deputy head Laszlo Andras Borbely said, however, that the bond auction system will be more flexible and that the volumes offered could change either way, depending on demand.

And Oszko said

AKK plans one reverse auction in August, two in September and none in October. AKK held the auctions every week from the middle of March until the middle of June, and extended the early buybacks to bonds maturing in 2012, in a move to ease market oversupply. It bought back slightly more than HUF 500bn of bonds at the weekly buybacks in the period. AKK has been financing the bulk of expiries and the general government deficit with money from a EUR 20bn stand-by arrangement from the IMF, EU and World Bank approved last autumn after the bond market dried up because of the global financial crisis. Discount T-bill auctions continued, but regular bond auctions were suspended at the end of October and were not relaunched until late April. Hungary is expected to make a foreign currency bond issue – its first since June of 2008 – earlier than the autumn, as originally planned, Finance Minister Peter Oszko said in a television interview.