Hungary's MNB says no FX issuance necessary during 2016

Hungary MNB's chief economist remarked in a press conference that there was no reason for the government to plan the euro bond issuance in 2016, adding that the government will be able to retire all maturing FX debt using the central bank reserves and substitute local currency borrowing for budget purposes.

A significant amount of maturity is expected in 2016, which include EUR 2bn of EU loan, EUR 2.5bn more in regular euro bonds, mostly in first half of 2016. The central bank's guidance indicate that the government will not look to roll over this debt but will retire most of it.

The government also has plans to pre-pay some EUR 900mn of FX debt in 2016, in this year already, Hungary's gross external debt/GDP ratio, under this assumption will drop to 113% by mid 2016.

"This steady decline in FX debt from very high levels has supported Hungarian asset valuations over the past couple of years, and has triggered upgrades to Hungary's credit rating outlook this year; we anticipate an outright upgrade in the credit rating back to investment grade during 2016", says Commerzbank.