Bloomberg News

Forint Bond Yields Fall to 9-Month Low on Hungary Rate Cut Bets

July 13, 2012

Hungary’s bond yields fell to the lowest in nine months on bets talks on a bailout by the International Monetary Fund will allow the central bank to cut interest rates.

The rally in benchmark forint-denominated notes due in 2022 reduced yields 17 basis points, or 0.17 percentage point, to 7.783 percent, the lowest since October. The forint strengthened 0.2 percent to 289.4 per euro by 2:10 p.m. in Budapest, leaving it little changed this week.

The planned start on aid talks with the IMF and European Commission next week creates room to begin monetary easing, central bankers Ferenc Gerhardt and Gyorgy Kocziszky said on July 11 in a joint interview in Budapest.

“This is a very strong hint at the stance of the monetary policy, rare in its kind in recent monetary history of Hungary,” Janos Samu, a Budapest-based economist at broker Concorde Ertekpapir Zrt., wrote in a research report today on the two rate setters’ comments.

Hungary yesterday raised 61 billion forint ($257 million) in bonds, 17 billion forint more than planned, at an auction, according to results from the Debt Management Agency on Bloomberg. The sale included 30 billion forint in 2015 debt at an average yield of 7.44 percent, the lowest for that maturity since October.

The Magyar Nemzeti Bank on June 26 left its benchmark interest rate unchanged at 7 percent for a sixth month.

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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