Yield On Hungary's12 Month Bill Surges To 5.75% In First Auction Post IMF Relationship Collapse
Yields on Hungary 12 Month Bills surged in the just completed Bill auction, jumping to 5.75%, or by 32 bps, since the last auction two weeks. This is
just tight of what Greece would likely have to pay for a comparable
maturity. Investors were focused on this deal as it was the first
issuance by the troubled country since the breakdown in IMF relations over the weekend, leaving the country in the liquidity cold
and without a €25 billion lifeline. Surely, European investors are far
more transfixed by backward looking industrial production numbers that
served to feed the massive surge in Chinese imports over the past month
(not to be repeated for a while), and totally ignoring the continuously
deteriorating liquidity situation in their continent (Eur LIBOR just hit
a fresh year high). And speaking of China, it was announced by the
European Trade Commissioner (proudly at that), that China's SAFE had
been accumulating bonds of bankrupt Greece and semi-bankrupt Spain, purchasing several hundred million in ECB-backstopped paper
of the two countries. Just like SAFE ran home to its communist parents,
asking for rescue capital after its US investments blew up in May, so
this too will serve as a preamble to comparable self-punishment.
Some more on the Hungarian auction from Portfolio.hu
While Tuesday’s auction of 3-month Treasury bills was marred by muted demand, Hungary’s Government Debt Management Agency (ÁKK) has allocated the entire HUF 50 billion lot of 12-m bills (D110727) today. The average yield, though came in substantially higher.
At today’s auction the ÁKK has received HUF 69.8 bn worth of bids on the HUF 50 bn 12-m bills on offer, but it has sold no more than the original lot.
Accepted yields were in an unusually wide range between 5.60% and 5.85%. The average yield was set to 5.75%, up 15 basis points from Wednesday’s benchmark fixing (of D110601) and 32 bps higher than at the previous auction of the bill two weeks ago.
Market News provides more color on China's desire for sloppy seconds. It is somewhat ironic that the country's foreign reserve administrator had to crawl back to mama a few months ago begging for rescue funding after its US investments had turned sour leading to massive losses. Surely by investing in such quality paper as Greek and Spanish bonds, this will never happen again.
China's State Administration of Foreign Exchange (SAFE) has purchased several hundred millions of euros in European government bonds, including Greek and Spanish debt, the European Trade Commissioner said Thursday.
Karel de Gucht spoke to an audience in Shanghai about China's presence in Europe and cited SAFE's "recent purchases of several hundred million euros of government bonds in the eurozone (particularly Spain and Greece)."
His comment follows a report that China bought as much as E400 million of 10-year Spanish bonds earlier this month, having ordered E1 billion. Asian investors made up 14% of the purchases compared to 5% of a similar deal with Spain in January. China's purchases made up about half of those by Asian investors, the Financial Times said.
China's foreign exchange reserves hit a record $2.4543 trillion at the end of the first half of this year. Around 20% of those reserves are thought to be euro-denominated, and around two-thirds are estimated to be invested in dollars.