Sharp decline in the price of Hungarian government bonds – What happened here?
By mid-July, the amount of outstanding Fixed Hungarian Government Bonds decreased to an unprecedented level, falling from 5004 billion forints at the end of June to 4974 billion forints. This occurred despite the fact that retail investors continued to actively purchase these bonds. The State Debt Management Center consciously purchased a significant amount of 7% Fixed Bonds, saving taxpayers approximately 1.5 billion forints per year. They also plan to continue purchasing bonds in a favorable market environment.
In a straightforward manner, the outstanding balance of Fixed Magyar Government Bonds decreased by the middle of July: the outstanding balance fell from the record level of 5004 billion forints at the end of June to 4974 billion forints, despite the fact that retail investors continue to buy this bond with the highest activity every week. The reason behind this lies in a deliberate move by the Debt Management Center: in the first week of July, the DMC purchased back a significant amount of FixedMÁP bonds, mainly with an interest rate of 7%, from the accounts of dealers, in order to reduce the government’s interest burden. This operation saved taxpayers approximately 1.5 billion forints per year by switching to cheaper financing for higher-interest bonds. The DMC has indicated that it plans to continue buying back bonds in the current year if market conditions remain favorable.
