Hungary CDS Off To The Races: +60 On News IMF Mission Chief Going To Budapest For Informal Talks

Tyler Durden's picture

Retuers reports that the IMF mission chief Rosenberg is going to Budapest to hold informal talks with the new Hungarian government - is this a preamble to the latest admission of austerity failure in an IMF intermediation. Independent of this, Hungary CDS is now exploding wider, and was 60 bps at last check, however this name is now virtually bidless. In other news reports that Hungary was forced to cut a bond auction today over subdued demand.


Amidst volatile global investor sentiment, which happens to be
positive at the moment, Hungary’s Government Debt Management Agency
(ÁKK) has observed muted demand at its bond auctions on Thursday. The
issuer received HUF 932 bn worth of bids on HUF 50 bn instruments and
sold HUF 2 bn less of the 5-yr benchmark bond than originally planned.
The average yields came in at around yesterday’s benchmark fixings, but
were moderately up from the avg. yields at the previous bond auctions
two weeks ago.

for a HUF 25 billion lot of 3-year government bonds (Series 2013/E)
totalled HUF 38.7 billion, and the issuer accepted bids only on the
original amount on offer. Accepted yields were in a range between 6.26%
and 6.39%. The 6.33% average yield is down 1 bp from yesterday’s
secondary market benchmark fixing but 15 bps higher than at the
previous auction yield two weeks ago.

agency received HUF 29.3 billion in bids for the Series 2016/C 5-year
bond, of which HUF 15 billion was on offer. Despite the large enough
demand, the issuer allotted HUF 13 bn, i.e. HUF 2 bn less than the
original lot. ÁKK chief László András Borbély said the reason behind
the cut is that the agency is trying to keep the gap between the
average and the highest yields in check and so it choose not to accept
some of the bids in higher yield areas.

Accepted bids were
between 6.84% and 6.90%. The 6.87% average yield is down 3 bps compared
to Wednesday’s benchmark fixing, but 6 bps higher than the avg yield at
the previous bond auction.

was HUF 10 bn worth of 10-yr bond (2019/A) on offer, for which bids
totalled nearly HUF 24 bn. The bid-to-cover ratio was large enough for
the ÁKK to sell the original lot on offer. Accepted yields were between
7.32% and 7.41%. The 7.38% average yield marks a 3-bp rise compared to
Wednesday’s benchmark fixing, and is 33 bps higher than at the previous
auction two weeks ago.

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BernankeFed's picture

This sounds eerily similar to informal talks IMF was having with Greece before its full-blown supposed bailout.  Hungary is hungry for dollars like most of eurozone, Iran, Tom Brady's wife etc.

doolittlegeorge's picture

and of course Germany itself had to pull an auction of its debt quite recently as well.  Hmmm.  How long before "the Adolph Eichmann of Finance" known as the IMF throws Bavaria under the bus?  Indeed I think the IMF may have been "out of ammo" for quite some time now.  It certainly goes a long way towards explaining why this so called "crisis" (20% percent rates in Greece is a crisis?  Can hardly wait to hear what they think is actually bad!) keeps churnin' and burnin'.  Welcome to what they called in the Cold War "the Domino Theory"--only we're talking "the capitalist version" this time.  There appears to be a "flaw" in the "programming" although why anyone should be surprised is beyond me.  Karl Marx said it best:  "there's a contradiction."  He just didn't point to the right one.

papaswamp's picture

they have some gold left to unload before they run completely out

taraxias's picture

The world is drowning in debt.

The Franchise's picture

Don't they pay attention to the "pickup truck indicator" over in Hungary? What is wrong with them?

Joe Shmoe's picture

I missed that one.  Please enlighten me?

carbonmutant's picture

Good find Tyler...

papaswamp's picture

And I thought today was going to be boring.

Roy Bush's picture

chug-a-chug-a-chug-a chug.....I hear the money a-printin'!

silvertrain's picture

No need to worry people, just take it easy..The IMF is going to open an SDR line of credit shortly and all will be well this evening..


Trichy's picture

Don't know about Hungary but a majority of the outstanding corporate bonds in the east are denominated in Euros. Look for Austrian banks blowing up soon.

papaswamp's picture

whoa Hoeing just said he pushing for the rates to be jacked to 1% by end of summer.

"WASHINGTON (MarketWatch) -- Thomas Hoenig, the president of the Kansas City Federal Reserve bank, laid out on Thursday his proposed plan to take short-term interest rates from near-zero to 4.5%. In a speech in Bartlesville, Okla., Hoenig said the country pays a high cost for low interest rates, suggesting that the financial crisis stemmed from the very low interest rates of 2002-2005. Hoenig said the Fed should aim to get the federal funds target rate to 1% by the end of summer and then pause to assess the outlook. This should be followed by moving rates to 3% "reasonably quickly" and then a final stage bringing rates to 4.5%. Hoenig said the most recent economic data hint that the economy may be stronger than expected. He said inflation would likely to remain low for the next year or so, but then drift higher"

Trichy's picture

Good idea, why don't they just default straight away.

The interest payments would be 200% of tax revenue. 

Leo Kolivakis's picture

Another CDS

MrTrader's picture

@Leo : Bad world we're living in. Maybe Debrahlee's "arguments" need to be regulated ?

TonyV's picture

It is not the same situation as Greece. Hungary is not part of Eurozone, they can print their own money. The question is - How do you short Forint?


Trichy's picture

Not really. That's the problem if their corporates have Euro denominated debt. If you print you bankrupt them all.

TonyV's picture

I see your point. Thank you

Trichy's picture

I'm not 100%, but all their neighbours have done so, courtesy of Austrian banks.

Hephasteus's picture

Let me guess. The IMF will offer the same deal as america got during the last great scam depression. Money in exchange for the ability to tax citizens directly. Although they blew that by not getting it ratified.

Nope just figured it out. Everybody's bond auctions fail. The IMF comes in and collects carbon credit taxes from all the broke countries. Nobody asks a single citizen what they want to do. The citizens form into a unified whole of hatred and disgust and blow up the entire galaxy with our minds.

Temporalist's picture

Having gone to Budapest not long ago, the whole city seemed to be in a general malaise, waiting for something to happen.  They are not lazy people but have been at the crossroads of many political and economic influences, including communism, and have not yet recovered fully.

I'd recommend it for its spas and cuisine and while it does have a long history you have to search it out.  Of course the Opera House is pretty famous.

dollydog's picture

things aren't looking great for Hungary at the moment. but expecting it to be Athens mark 2 is a little over the top. seriously.