UPDATE 4-Hungary sells $2 bln worth of 10-yr debt

* Sold at discount of 99.86

* Yield is 265 basis points over U.S. Treasuries

* Hungary last issued USD-denominated debt in 2005

(Updates with sale details, comment, new headline,
dateline)

NEW YORK/LONDON, Jan 26 (BestGrowthStock) – Hungary on Tuesday sold
$2 billion worth of 10-year debt, mainly to U.S. investors, in
a move confirming its plans to come off International Monetary
Fund aid this year.

Hungary sold the debt at a discount price of 99.86,
bringing a yield of 6.269 or 265 basis points over comparable
U.S. Treasuries, Deutsche Bank, one of the lead managers of the
deal said. The debt matures on Jan. 29, 2020, carrying a coupon
of 6.25 percent.

This was the first U.S. dollar-denominated offering by
Hungary since 2005 when it sold $1.5 billion worth of 10-year
debt.

“So for the U.S. market this was a rare sovereign offering.
The book was approximately $7 billion with 65 percent placed in
America. Five years ago the book was more heavily weighted
towards Europe and Asia,” Nigel Cree, head of syndicate for
Deutsche Bank Americas in New York, told Reuters.

“Unlike many of the other sovereign deals in January, there
is close to no local participation because of selling
restrictions making it hard for local (Hungarian) investors to
buy external debt,” Cree said.

Deutsche Bank, along with Citi are lead managers of the
Hungarian deal.

Buyers were heavily skewed toward U.S. money managers, with
some insurance companies and hedge funds, Cree said.

Hungary has said it plans a total of 1.5 billion euros
worth of foreign currency (Read more about trading foreign currency. issuance in the whole of this year
mainly to finance expiring debt. [ID:nLDE5BG1OG] Tuesday’s
issue would almost equal this amount.

The central European country follows in the steps of
regional peer Poland which placed 3 billion euros in 15-year
bonds earlier this month.

Hungary, which escaped financial meltdown in October 2008
only with the help of IMF and European Union aid, has gradually
returned to market financing over the past year as it
stabilised its finances and reined in the budget deficit.

It last issued a eurobond in July 2009 and it has said that
this year it does not plan to draw down any more IMF financing
but would use some of the funds already placed at the central
bank from the package.

Even though the country has kept its budget deficit in
check last year, analysts see increasing fiscal risks ahead
this year as parliamentary elections are due in April, and
Hungary has had a track record of heavy overspending in past
election years.

Hungary sold 1 billion euros of five-year eurobonds at 395
basis points over mid-swaps in July 2009 in an issue which
attracted strong demand then.

Some investors compared Tuesday’s dollar bond’s pricing
unfavourably with the paper sold by euro zone member Greece
this week. Greece placed 8 billion euros in paper on Monday at
350 basis points over mid-swaps.

Building on investors’ appetite for emerging markets,
central European governments have all signaled plans to tap
international debt markets early this year.

Earlier this month Poland, whose economy has escaped
recession, placed a 15-year bond issue worth 3 billion euros
and said it planned to issue $1 billion in dollar-denominated
bonds probably in the first quarter.

The Czech Finance Ministry is also considering tapping the
market for dollar-denominated bonds this year.

Stock
(Reporting by Daniel Bases and Caryn Trokie
in New York, Sujata Rao in London and Krisztina Than in
Budapest; editing by Andrew Hay)

UPDATE 4-Hungary sells $2 bln worth of 10-yr debt