Hungary To Tap International Markets As E.U. Blocks Funds
(Bloomberg) -- Hungary plans to offer bonds in euros and dollars as Prime Minister Viktor Orban seeks alternatives to billions of euros in blocked European Union funding.
Hungary is seeking to sell seven-year and 12-year benchmark-sized bonds in dollars and nine-year bonds in euros in the near future, according to a person familiar with the matter, who asked not to be identified because they're not authorized to speak about it. BNP Paribas SA, Deutsche Bank AG, Goldman Sachs Group Inc., ING Groep NV and JPMorgan Chase & Co. are to arrange the sale, the person said.
Potential proceeds will help plug holes in Hungary's budget, strained by lavish social spending in the run-up to elections in April that helped Orban secure a fifth term. Hungary currently can't access 7.2 billion euros ($7.7 billion) in EU pandemic relief funds due to concerns about the erosion of rule of law and graft.
Financing challenges have led Orban to announce far-reaching budget consolidation plans over the weekend, including about $6 billion in government spending cuts and savings, as well as a sweeping set of windfall taxes on industries ranging from banking to energy.
Hungary is the latest country from central and eastern Europe to tap international markets in recent weeks. Foreign funding is a cheaper option for regional sovereigns as they face a spike in local-currency yields after a series of interest rates hikes meant to stifle surging inflation.
Poland priced 2 billion euros in 10-year bonds last month, while Croatia sold 1.25 billion euros worth of same-tenor debt in April. The yield on Hungary's 10-year forint bond hovered around 7.2% on Tuesday.
Earlier on Tuesday, Hungary raised its target for foreign bond sales this year by 2.5 billion euros to as much as 5.1 billion euros. That leaves up to 4.5 billion euros in foreign-currency bond sales this year after a Samurai bond the country priced in February.
Hungary's government said last week that its talks with the EU on unlocking pandemic recovery funds were in their “last phase,” which triggered a modest recovery in the forint from near a record low against the euro. The EU hasn't confirmed that fund disbursement was imminent.
On Tuesday, Finance Minister Mihaly Varga unveiled the country's 2023 draft budget, which counts with inflows of $5.6 billion euros in EU development funds over the course of next year.
(Updates with EU funding projections in last two paragraphs.)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
-
Talking Points This Week: Leadership Shock At Nvidia, Earnings Strength, And The Fog Over Hormuz
The Anthropic IPO pricing and first trading day, Nvidia's upcoming earnings, and any fresh signals from Iran will set the tone for the following week.
-
Signature Play: The Classic Cocktail Is Dead. Or Is It?
Classic cocktails are disappearing from India's cocktail menus. But they're still being ordered, taught to bartenders and borrowed from. So, who's really having the last drink?
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
