Hungary is unlikely to issue a eurobond ahead of any agreement with the IMF over bailout funds, the country’s economy minister, Zoltan Csefalvay, has said. In an exclusive interview with Euromoney, he also said negotiations with the global policy lender would be “relatively quick”, since Hungary’s main debt and budget figures “are in good shape”.
Contrary to earlier indications from the debt management agency (AKK), it would be “logical” for Hungary to conclude a deal with the IMF over a €15-20 billion loan before attempting to raise much-needed hard-currency funding from the eurobond market before, he said.
“It would be logical to wait until it’s in place because one of the main aims of acquiring this safety net is to achieve lower yields.”
Csefalvay rejected suggestions Hungary had forfeited international market access due to investor concerns over soaring domestic and external debt levels, unorthodox fiscal policies and the loss of Hungary’s investment grade status.
“Hungary has been able in the last nearly two years and is able today and will be able also in the future to roll over its debt on the bond market,” he said.
Hungary needs to roll over around €4 billion of its debt this year and to-date has ducked cross-border bond issuance, citing high yields.
Csefalvay acknowledged that Hungary had work to do to win back the trust of its international investor base - “to lose confidence is very easy, to regain it is very difficult, that’s what we have learned since January” – but added that the process was already well underway.
“If you compare today’s situation with January I think we are regaining the confidence of bond investors step by step – and we have never lost the confidence of foreign direct investors in the real economy,” he said.
Triple-B
He was also upbeat on the prospects for the return of Hungary’s triple-B rating. “Last year the rating agencies were impatient with some developments but I hope that when they will see the results of our reforms and the implementation of the IMF agreement they will reconsider the rating.”
Hungary’s economy minister expects negotiations with the IMF to proceed swiftly, since the country’s dispute with the European Commission over a proposed central bank independence law has been resolved.
