Hungarian government plans new foreign bond issuance following gigantic Chinese loan

The Hungarian government recently secured a EUR 1 billion loan from China under more favourable terms than the market, according to Finance Minister Mihály Varga, who did not disclose details about the interest rates. Varga hinted that Hungary might issue a Samurai bond in Japan this fall.

Issuance of new foreign bond on the horizon

The government’s goal is to involve more Hungarian institutional investors, such as banks and insurance companies, in purchasing Hungarian government securities. This approach aims to reduce the reliance on foreign and retail investors, which could also impact the conditions of retail government bonds. Varga told ATV that while the loan’s terms are favourable compared to market conditions and will mainly fund infrastructure development, further details on interest rates and usage were not provided.

Varga explained, “Disclosing additional information could harm business interests in bilateral agreements.”

New partners

He noted that Hungary’s debt management strategy has long relied on multiple sources to diversify its capital requirements. In recent years, in addition to traditional Anglo-Saxon and European markets, Qatar, Japan, and China have become significant partners.

A Samurai bond issuance in Japan is planned for this fall.