Hungarian retail investors continue to pile into domestic government bonds

Hungarian retail investors continue to pile into domestic government bonds
By bne IntelliNews October 17, 2017

The stock of government bonds held by households rose by HUF154bn (€500mn) September to an all-time high of HUF6.5 trillion, Hungary’s Government Debt Management Agency (AKK) said on October 16. The increase came after a drop in August, the first decline in the holdings of retail investors in six months.

Local bonds represent a growing share in debt financing, as retail investors held 25% of the country’s total debt at the end of September, AAK said. The government made it a priority to reduce the share of foreign currency debt within Hungary's total debt to reduce exposure to global market fluctuations and to increase the average maturity of debt instruments.

The stock of investments by retail investors expanded by HUF1.4 trillion in the first nine months of 2017, which is twice the amount targeted by the debt manager for the full-year.

Retail investors, faced with a lack of investment options in the near-zero interest rate environment, have been stocking up in huge volumes on government bonds, which have offered yields well above inflation. Given the strong demand, the AKK even lowered interest rates and trimmed fees for banks and sellers of the instruments to make it less lucrative as it sold nearly two times its issuance plans

The central budget’s share of non-forint debt fell from 45% in 2010 to around 23%, the AKK said.


Related Articles

V4 to build Budapest-Bratislava-Brno-Warsaw express railway

The Visegrad Group (V4) countries have decided to jointly build a high-speed railway connecting Budapest, Bratislava, Brno, and Warsaw, the Hungarian foreign minister said after talks with the ... more

Hungary misses recycling targets "by a considerable margin", EC says

Hungary has missed its recycling targets "by a considerable margin" since 2012, the European Commission said in a report published on September 25. Hungary was among 14 European Union member ... more

Orban first Hungarian PM to visit Kyrgyzstan, wants more business with Central Asia’s Turkic nations

Hungary has opened a $65mn credit line to support partnerships between Hungarian and Kyrgyz businesses in Kyrgyzstan, Minister of Foreign Affairs and Trade Peter Szijjarto said in Kyrgyzstan’s ... more