Hungarian state takes on EUR 3 billion in new loans

Hungary raised EUR 3 billion in new financing on 7 January after carrying out a successful eurobond issuance, according to a statement by the Government Debt Management Agency (ÁKK). Investor demand was strong, with the bonds heavily oversubscribed and selling out shortly after issuance.

Two tranches with different maturities

The transaction consisted of two separate bond tranches:

• EUR 2 billion in bonds maturing in 2033, carrying an annual interest rate of 4.25%
• EUR 1 billion in green bonds maturing in 2038, with an annual interest rate of 4.875%

According to ÁKK, proceeds from the EUR 2 billion conventional bond will be used for general financing purposes, while funds raised through the green bond will be allocated to financing and refinancing environmentally related expenditures in the central budget.

Strong investor demand and favourable pricing

Investor interest was particularly high, with total bids exceeding EUR 10 billion, representing roughly three times oversubscription. Thanks to the strong demand, pricing was set 30 and 25 basis points lower, respectively, than initially indicated.

The 2033 bond was issued with a 160-basis-point yield premium, while the 2038 green bond carried a 195-basis-point premium.

International banks led the transaction

The eurobond issuance was jointly managed by BNP Paribas, Erste Group Bank, ING Bank, JP Morgan, and Raiffeisen Bank International.