Russia denies deal to buy Hungary bonds

Russian officials have denied the validity of a report by the online version of the Hungarian business weekly HVG that it would buy a huge Hungarian FX bond package at a favorable interest rate to help finance Hungary’s state debt without the IMF.

Local weekly hvg.hu reported this Wednesday that Russia wants to buy USD 4.6 billion worth of Hungarian government bond at an interest rate of 2.25%, which is competitive enough even with IMF credit conditions. The deal was claimed to have been made at a meeting between Hungarian Prime Minister Viktor Orbán and Russian President Vladimir Putin in Moscow last week, portfolio.hu quotes the HVG website.

Russia issued an immediate statement to decline the validity of the report. The Kremlin told Reuters Russia did not agree to buy Hungarian sovereign bonds at the recent Putin-Orbán talks.

If true, the credit would be extremely cheap, compared to market conditions, as the 2.25% interest would beat even an IMF credit facility’s estimated 2.5% interest. This batch would practically fulfill Hungary’s planned FX bond issuance for 2013. According to reports, an additional EUR 5 bn worth of bond, to be paid for in Russian rubles, was also discussed.