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Hungary’s government offered to buy back $1 billion in dollar-denominated bonds, the latest effort to reduce foreign-currency risk and exposure to investors abroad.
The tender offer relates to four notes maturing in 2021-2024 with a total issue size of $9 billion, and expires on Jan. 27, according to a person familiar with the matter, who is not authorized to speak publicly and asked not to be identified. Hungary won’t issue foreign debt to fund the deal, Finance Minister Mihaly Varga told the MTI state news service.
Hungary has cut the share of foreign-currency bonds to 18% from more than 50% a decade ago, helped by sales of retail notes domestically. These bonds now account for almost a third of government debt. The eastern European nation has earmarked 1 billion euros ($1.1 billion) in non-forint debt sales for 2020, with a focus on selling green bonds denominated in Japanese yen or Chinese yuan.
Varga said successful economic policies, a favorable market environment, and low financing needs this year allow Hungary to replace high-yielding foreign-currency debt with longer-maturity funding.
Hungary’s dollar bond due 2024 jumped after the announcement, pushing yields 3 basis points lower on the day to 2.06%.
The tender, which is managed by BNP Paribas (PA:BNPP) SA, Citigroup Inc (NYSE:C). and JPMorgan Chase (NYSE:JPM) & Co., follows the debut sale of a new benchmark 20-year forint bond last week. The debt agency sold 17 billion forint at the auction, more than the 15 billion forint planned.