Hungary cancels three-year debt auction

Hungary has cancelled part of a government debt auction and seen the yield on government bonds rise.

Just Ft15 billion (£40.5m) of debt was successfully sold at auction today, compared with a target of Ft18 billion.

The interest paid on the debt that was successfully auctioned advanced to a two-year high. The average interest rate on the Ft5 billion of auctioned 10-year Hungarian government bonds rose to 9.7%, up from 8.78%.

AKK, Hungary’s debt management agency, also sold Ft10 billion in five-year bonds at a higher rate. The auction of three-year debt was cancelled because the range of yields offered was too wide, although the agency claims there was no shortage of potential buyers.

Last week saw Standard & Poor’s cut Hungary’s credit rating to junk status, echoing a similar move by Moody’s the month before.

This was preceded by the European Union and International Monetary Fund pulling out of bailout talks with the Hungarian government over concerns on the independence of the country’s central bank.

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