The stock of the Premium Euro Hungarian Government Bond (P€MÁK) in circulation leaped by EUR 563 million in May, after an increase of EUR 104.5 m in April and a massive decline of EUR 450 m in March, data by the Government Debt Management Agency (ÁKK) showed on Wednesday. Total stock reached EUR 1.645 trillion by the end of last month.

According to ÁKK figures, the stock of the Premium Euro Hungarian Government Bond rose by EUR 1.337 trillion in the first five months of the year, as only EUR 13,000 worth of P€MÁK were redeemed. Of the EUR 1.645 trillion stock at end-May households held 13%, domestic institutional investors held 83.4% and non-residents held 3.6%.

Fuels group MOL could have been one of the biggest buyers of the (P€MÁK) in early 2013 that stood on the sellers’ side in March, which means it is the oil company’s transactions that bring about the largest swings in the P€MÁK stock on the market. As for the massive growth in May we can only guess what large institution could be behind the purchase.

Regarding the change in the stock of P€MÁK in May we need to note that the ÁKK raised the available volume of the 2016/X bond by EUR 100 m in March, another EUR 100 m in early May and another EUR 150 m in mid-May. The stock thus rose to nearly EUR 1 m and so issuer closed the sale as of 17 May.

In order to keep the flow of P€MÁK sales uninterrupted the ÁKK started marketing a new series (2016/Y) to the tune of EUR 500 m with a 3.95% interest (1.7% interest and 2.25% premium, down from 2.5% at the previous batch). The issuer sold EUR 17.8 m of the new series by the end of May.

We should also highlight that the EUR 563 m jump in the P€MÁK stock is not reflected in the government’s deposits placed at the NBH. (Quite the contrary, as the latter decreased by HUF 62 bn to HUF 1,160 bn by the end of last month.) An explanation to that could be that in May the state had EUR 625 m redemption due towards the International Monetary Fund (IMF), which means the funds received from the sale of P€MÁK practically had “flown through its fingers.”

State deposits at the central bank

Hungary’s repayment obligations to IMF

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