Hungary's local governments ask for delay in debt service.

By bne IntelliNews August 4, 2011
The Hungarian local governments have asked PM Viktor Orban to support their request for a one-year moratorium on municipal debt repayments, MTI reported. Local authorities feel pressure, due to recent strong appreciation of the Swiss franc against the forint, considering that a major part of their debt is denominated in Swiss francs. The local governments have issued about HUF 600bn (EUR 2.2bn) bonds in 2006-2008 to co-finance EU-funded projects. Most of the bonds had 20-year maturity with a 3-year grace period, so principal payments on many of these papers will be due in 2011. Data from the central bank shows that 85% of the municipal bonds were denominated in foreign currency as at end-March 2011, while 89% of the bonds were subscribed by banks, operating on local market. The Hungarian government has not commented on the issue yet.

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