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On Last Week's Underreported Failed Hungarian Auction

Tyler Durden's picture




 

Another important piece of news that was lost in last week's "oilflow" in addition to the failed Chinese bill auction previously discussed on Zero Hedge, was the Hungarian 12-month bill auction on June 10th, which aimed to raise 50 billion Hungarian Forints ($214 million), of which the government only accepted HUF35 billion in offers. It is unclear if submitted bids actually topped 50 billion, yet the inability to find a mere $64 million at acceptable terms is very troubling. Fitch immediately stepped in to diffuse the situation, which is still very tense courtesy of the prior week's commentary out of Hungarian politicians that the country is in dire a situation as Greece: "Fitch Ratings has said on Friday that while Hungary’s Government Debt Management Agency (ÁKK) was able to sell less 12-month discount Treasury bills than it originally planned yesterday, the undersold debt auction means no threat to the country’s financing ability, but it does highlight its vulnerability that was exacerbated by "misjudged comments" by members of the new government" as portfolio.hu reports. The failed auction, does "highlight Hungary's ongoing vulnerability to global investor risk
aversion, sharpened recently by misjudged comments by the new Hungarian
government, and post-election uncertainty over the outlook for public
finances in the context of an already high gross government debt burden."

The full Fitch statement is as follows:

"Fitch says yesterday's undersold HUF50bn (about EUR180m) government debt auction - the first since the auctions restarted following the signing of the EUR20bn IMF-led support package - does not threaten Hungary's immediate financing ability, which is supported by access to substantial official external funds and large domestic deposits."

"It does however, as previously stated by Fitch, highlight Hungary's ongoing vulnerability to global investor risk aversion, sharpened recently by misjudged comments by the new Hungarian government, and post-election uncertainty over the outlook for public finances in the context of an already high gross government debt burden (for further details see, 'Fitch: Tight Fiscal Policy Needed to Stabilise Hungary's Ratings," published on 9 June)."

What is surprising is that even with the ECB now openly monetizing any European government debt (and in the process debasing the Euro further), including primary auctions that are on the verge of failure, that some country could not find enough submitted bids to accept 100% of them as attractive. The last thing the ECB needs is to be focusing on preventing another debt blowout in Spain, Portugal and Italy, and to lose sight of Hungary, Eastern Europe, and the Baltic states. On the other hand, when dealing with a continent in which traditional monetary policy is impossible, all other solvency metrics flow together like connected vessels. We expect no moderation for Europe's liquidity crisis, especially following recent disclosures that Europe proper is increasingly considering retrenching, and focusing on deficit reduction instead of wanton money printing.

 

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Sun, 06/13/2010 - 21:11 | 411446 GoinFawr
GoinFawr's picture

a béka segge allat.

Regards

Sun, 06/13/2010 - 21:16 | 411451 Crisismode
Crisismode's picture

I'm Hungary.

 

What's for dinner?

 

Forints?

 

Baked or Fried?

 

 

Sun, 06/13/2010 - 23:22 | 411683 Oracle of Kypseli
Oracle of Kypseli's picture

I am also Hungary and I want Swiss Greece on my Turkey and a Danish

Sun, 06/13/2010 - 21:16 | 411450 Mitchman
Mitchman's picture

The euro's at 1.2182.  Incredible.

Sun, 06/13/2010 - 21:42 | 411493 Schlep
Schlep's picture

Maybe they can get in this sure winner of investing.

Breaking News Alert
The New York Times
Sun, June 13, 2010 -- 9:22 PM ET
-----

U.S. Discovers Nearly $1 Trillion in Afghan Mineral Deposits

The United States has discovered nearly $1 trillion in
untapped mineral deposits in Afghanistan, far beyond any
previously known reserves and enough to fundamentally alter
the Afghan economy and perhaps the Afghan war itself,
according to senior American government officials.

The previously unknown deposits -- including huge veins of
iron, copper, cobalt, gold and critical industrial metals
like lithium -- are so big and include so many minerals that
are essential to modern industry that Afghanistan could
eventually be transformed into one of the most important
mining centers in the world, the United States officials
believe.

Sun, 06/13/2010 - 21:48 | 411503 brushfire
brushfire's picture

On the other hand, when dealing with a continent in which traditional monetary policy is impossible, all other solvency metrics flow together like connected vessels.

very well put. intervention is useless. the collapse is either massively deflationary or hyperinflationary. pick your poison and buckle up.

 

Sun, 06/13/2010 - 21:54 | 411511 Cleanclog
Cleanclog's picture

Austrian banks have more exposure to Romanian and Bulgarian sovereign debt (over $80B) than French bank have to Greece (about $77B).  And Greeks have about $40B in exposure to Bulgaria, Romania.  Still think this will be contained?  Aid packages cannot take care of this spiraling shuffle board.  Debt has gone tilt to assets that can support.

Sun, 06/13/2010 - 22:24 | 411570 Fazzie
Fazzie's picture

   When one Eurozone politician commits a Keynesian no-no, ie telling the truth, another one rushes in to patch things over with the official extend and pretend mantra of more debt is the responsible course of action, expressing opinions to the contrary is "misjudged".

   Dammit, that auction would have went of without a hitch, with investors falling over one another for Hungarian IOUS, if some jackass would have just kept their trap shut!!

 Now it couldnt be that the auction failing underscores some real issues, could it?? Naw, it was one guys comments.

 

Sun, 06/13/2010 - 22:44 | 411615 QEsucks
QEsucks's picture

 TD, I think you lost the captcha. That's 164 mill US. 213 forint= 1 USD.

 GoinFawr: Under a Frog's Ass?  Shouldn't you be citing procreation with a horse?

 Never heard beka, just lo.

Mon, 06/14/2010 - 00:28 | 411778 GoinFawr
GoinFawr's picture

GoinFawr: Under a Frog's Ass?  Shouldn't you be citing procreation with a horse?

Heh, nem Qe, but while it might be considered 'low' to shag a horse (unless yer a 'Scottish King in training' or some'at like) you have to admit that it is at least literally not as low a place as the space beneath a frog's ass. Which is where the Hungarian economy is/has been headin' for some time

Some of my family are Magyar, and when things are not going so well for her there's one who will always say this. It's probably a dated expression; she's gettin' up there in years.

Mon, 06/14/2010 - 00:10 | 411783 Rider
Rider's picture

The market don't F care about failed auctions.

Like in the subprime mess, bad news kept comming for months, until the banks were bankrupt and liquidity absolutely gone, the pump monkeys propped up the market til the very end, looks like another moonshot Monday is brewing.

 

Mon, 06/14/2010 - 00:48 | 411836 Cleanclog
Cleanclog's picture

Moonshot on Afganistan because of metals/mineral find.   Cuz our companies have invested so deeply?  I don't think so.  But it does expain Russia's interest in 1980.  Sigh

 

Mon, 06/14/2010 - 07:37 | 412231 Zina
Zina's picture

Now that Belgium will be split in two, who will pay for Belgian public debt??

a) The "old" Belgium

b) The "new" Flanders republic

c) None of the above

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