Hungary

Reducing Hungary’s FX liabilities continues to be one of its debt management office’s (AKK) driving factors, but CEO György Barcza also remains committed to diversifying the country’s funding sources. With a Japanese yen bond maturing, and a €1bn bond planned, 2017 looks set to offer investors some rare opportunities to buy into Hungary’s improving debt story.

Emerging market bankers are optimistic for a busy first quarter after markets opened on Tuesday in a much stronger position than they had a year ago. Sovereign issuers from the Middle East and CEE are expected to lead the charge.

In this Monday round-up, Shenzhen gets connected, the RMB stabilises and China capital outflows in the spotlight.

In this new Monday round-up from GlobalRMB, we bring you a collection of market and regulatory developments from the weekend as well as provide a preview of upcoming events this week.

Eastern European telecoms operator RCS&RDS on Thursday printed a refinancing euro bond that was first planned in euros and Romanian leu, while it mulls a potential IPO.

A surprise upgrade from Standard & Poor’s has prompted Hungary’s international debt to rally 30bp and take its credit default swap surging inside that of Italy, the most traded sovereign CDS reference entity.

A surprise upgrade from S&P saw Hungary’s external debt rally 30bp over the weekend and, with the country set to enter crossover indices as an investment grade credit, further flows from passive investors are expected.

In this round-up, China is keen to expand FTZ sphere, yield differential continues to narrow between offshore and onshore bonds, and London reiterates desire to promote RMB internationalisation. Plus, a recap of our coverage this week.

Hungarian Eximbank is syndicating a $600m-equivalent loan with a tight margin, bankers said, after oil and gas firm MOL secured a tightly priced deal last month.

Hungary is an area of focus for the loan market this week, with both MOL Group and Hungarian Eximbank weighing up commitments from lenders.

China’s curb on capital outflows means the Panda bond market is yet to live up to the excitement generated by a series of high profile transactions last year. But György Barcza, CEO of the Hungary Government Debt Management Agency, is committed to pushing out a transaction even if the ability to repatriate proceeds offshore remains uncertain. Rev Hui reports.

“The Hungarian economy is performing very well and its vulnerability to external shocks has declined,” notes a recent IMF report. At the GlobalCapital Hungary roundtable, representatives from the public and private sector exchanged views on what recent indicators mean for the longer term performance of the economy, and on the country’s banking industry and capital market. Participants in the roundtable, which was hosted by the Ministry of National Economy in Budapest in early May, were: