Hungary plans to offer a range of dollar and euro bonds to shore up its budget as it’s facing a potential delay in accessing European Union (EU) funds because of a feud with the bloc over democratic values.
The country may sell 10-year and 30-year bonds in dollars, as well as seven-year and/or 20-year bonds in euros, according to a person familiar with the matter, who asked not to be identified because they’re not authorised to speak about it. Hungary’s debt management agency increased its cap for 2021 foreign-currency borrowing to 4.5 billion euros ($5.3 billion) from 644 billion forint ($2.2 billion).
“The plan to issue several bonds, in both euros and dollars at once, is quite bold, but considering the state of the market, the issuance will be successful,” said Anton Hauser, a Vienna-based fund manager at Erste Asset Management.
The issuance spree comes as spreads on dollar and euro debt hover near the lowest levels in more than a decade, with the world’s largest central banks continuing to offer
support given concerns over the stability of the global economy. Hungarian hard-currency bonds have underperformed emerging-market peers this year, losing 2% in dollar terms as the broad market rose 0.1%, according to a Bloomberg index.
Hungary has yet to access to billions of euros in EU pandemic funds because of Prime Minister Viktor Orban’s stand-off with the bloc’s executive. The EU says it’s concerned about Hungary’s spotty record in fighting corruption.
Orban is facing parliamentary elections that will most likely take place in April 2022. It could be the most closely-fought Hungarian vote since he returned to power in 2010.
Hungary mandated BNP Paribas SA, Citigroup Inc, Goldman Sachs Group Inc and JPMorgan Chase & Co to arrange the bond sales. It last tapped the euro market in November, and hasn’t sold dollar bonds since 2014.
It’s a busy start to the week for emerging-market sovereign issuance, with Turkey and Indonesia also selling dollar bonds.