UPDATE 1-Hungary sells 3-mth T-bills as sentiment better

* T-bill auction successful, reflecting improved sentiment

* Markets eye govt announcement at 1100 GMT

(Adds detail, traders, analysts)

BUDAPEST, June 8 (BestGrowthStock) – Hungary sold 45 billion forints
($229 million) of 3-month Treasury bills on Tuesday, the total
planned amount, helped by improved sentiment as markets waited
for the government’s plans at 1100 GMT.

Investors bid a total of 108.67 billion forints and the
bills were sold at an average yield of 5.26 percent, up from
5.19 percent at the last auction a week ago, before the market
turmoil caused by the government’s mixed messages about the
state of Hungary’s public finances.(HUAUCTION01: )

But analysts and traders said investor sentiment was still
nervous, and a real test of investors’ appetite for Hungarian
assets will be government bond auctions next Thursday.

“It was a good auction (today) but in the meantime the
forint began to pare some of its early gains, so the yields
headed higher,” a fixed income trader said.

“The euro crept back across $1.19, weakening the forint.
Core markets began to set trends more, investors have realised
that the Hungarian scare has been overplayed in the last few
days,” the trader added.

The trader pointed out that Hungary’s last bond auction was
already undersubscribed last Thursday before the impact of
comments from the ruling Fidesz party began to be felt on
markets, and global sentiment was less supportive across the
central eastern European region.

“The Romanian bond auction was scrapped, some big American
funds quit the region, so this is a process that we are
returning to,” he added.

Another trader also said the Hungarian auction went well,
but he said further central bank rate cuts had been priced out.

“Sentiment seems to be slowly improving on the bond market,
as well. Yields at the long end are close to 8 percent and
long-term forward spreads, like the 5-year/5-year euro/forint
spread have been narrowing since Friday,” said Gyorgy Barcza,
analyst at ING.

“An improving long-term outlook is usually the first sign of
a recovery process, so the healing will probably continue.”

Another analyst, Gyorgy Barta at CIB Bank, said much
depended on the government’s announcement on Tuesday.

“If plans do not come up to (market) expectations then the
auction (next Thursday) might be difficult, but I think the
bonds will still be sold,” Barta added.

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(Reporting by Krisztina Than and Marton Dunai; editing by
John Stonestreet/Ruth Pitchford)

UPDATE 1-Hungary sells 3-mth T-bills as sentiment better