Hungary's Government Debt Management Agency (AKK) will lower the interest rates on its flagship retail government securities from July 17, in the latest step in its strategy to reduce the state's financing costs after years of elevated interest expenses, financial website Portfolio.hu writes.

The move comes amid declining market yields, giving the debt manager room to reduce returns offered to households while preserving the attractiveness of retail government bonds. Policymakers cut the base rate at the June meeting to 6% and the markets are pricing in another 50bp cut in the last two summer months.

From July 17, the interest rates on a new series of the fixed-rate FixMAP and MAP+ bonds (with step-up interest) will be reduced by 50 bp. Investors wishing to lock in the current, higher rates can purchase the existing series until July 16.

AKK will also shorten the maturity of newly issued FixMAP bonds from five years to three years, reflecting stronger investor demand for shorter-term products. A new series of inflation-linked Premium Hungarian Government Bonds (PMAP) will also be launched, with its terms remaining unchanged.

The agency said the adjustments are intended to preserve stability in the retail government securities market while ensuring "cost-efficient state financing."

The decision is particularly significant because Hungary continues to face one of the highest public debt servicing costs in the European Union, accounting for more than 4% of GDP.

Reducing the coupon on newly issued retail securities, therefore, represents one of the few levers available to gradually lower future financing costs without reducing borrowing volumes.

Hungary's retail government bond programme has become a central pillar of sovereign financing over the past decade, reducing reliance on foreign investors and increasing the share of domestically held debt.

According to AKK, Hungarian households held HUF14.03 trillion (€35bn) worth of retail and institutional government securities at the end of March, HUF488bn more than at the end of 2025.  This roughly accounts for a fifth of state debt. Around 1.4mn retail investors now own government securities.

The household investor base has remained resilient despite falling yields, with government securities continuing to rank among the country's most popular savings products.

Households also continued purchasing institutional government debt during the first quarter, increasing holdings of institutional bonds by HUF47bn and treasury bills by HUF80bn.

Beyond lowering borrowing costs, AKK is also reshaping Hungary's retail debt portfolio to make financing more predictable. The agency has been gradually steering investors away from inflation-linked products towards fixed-rate securities, reducing the state's exposure to future inflation shocks.

Since the end of 2025, outstanding PMAP holdings have fallen by HUF514bn, while the stock of FixMAP securities has increased by HUF660bn.

As a result, fixed-rate instruments accounted for 49.7% of the retail government bond portfolio at the end of the first quarter, up from 44.1% at the beginning of the year. The average remaining maturity (ATM) of retail securities has also declined from around four years to approximately three years. Regarding total debt, the ATM was 5.5 years at the end of Q1.