Hungary successfully closed the repurchase of high-yield dollar bonds. With this transaction the state will achieve more than HUF 42 billion savings in interest in the years to come, Mihály Varga informed MTI (Hungarian Press Agency).

The Minister of Finance pointed out that concurrently with the repurchase, the country risk index improved to 47 basis points, a level that has not been seen for 12 years. It means that the public debt is getting cheaper to finance and the reputation of the Hungarian economy is getting better. The debt manager announced the repurchase of high-yield dollar bonds in the amount of USD 1 billion between 21 and 27 January, Mihály Varga reminded.

As he said: Államadósság Kezelő Központ (Public Debt Management Agency) made the repurchase in the total nominal amount of USD 1 billion from the four high-yield bonds with maturity dates in 2021-24 and closed the futures contracts meant to cover foreign exchange risks with exchange gains. The available HUF and foreign currency liquid assets of the state were used for the repurchase and no new foreign currency bond had to be issued. The Minister emphasised: through this transaction, the state will achieve a significant amount (a total of HUF 42.7 billion) of accrual-based savings in interest until 2024 of which HUF 16.5 billion will emerge already in 2020.

Hungary’s five-year CDS spread had been around 400 points in 2010, then at the time of the struggle with IMF it went up over 700 points but in the past twelve years it has never been below 50 points, Mihály Varga emphasised adding also that this brought the Hungarian CDS spread nearly up to the level of the Polish spread. As he explained: one of the factors in this advantageous process is that Hungary manages to gradually decrease the public-debt-to- GDP ratio and tends to use domestic funds instead of foreign ones for financing the public debt increasing with this the stability of Hungarian economy.