First MNB collateralised loan tender was held today

HUNGARY - In Brief 25 Mar 2020 by Istvan Racz
The MNB accepted bids for HUF 43.1bn of 5-year collateralised loans, offered by the Bank at a fix 0.9% interest rate, the same as the base rate, today. This was the first such tender, following the announcement of the new facility yesterday.The MNB has not disclosed if there were any bids for shorter maturities (from 3 months to 3 years) at all, but it would not be surprising if banks had been interested only in taking the longest maturity available, given that the loans were offered at a uniform 0.9% interest rate for all maturities. The MNB announced no quantitative limits (specific amounts on offer) either for specific maturities or as a total on offer for the day.One possible intention behind today's pricing may have been to push banks towards the longest maturity, possibly with a view to supporting tomorrow's bond auctions by the ÁKK. There will be HUF 20bn of government bonds on offer both for 3 and 5 years, and the authorities may hope that banks will use their newly secured liquidity to step up as a major buyer at those auctions. A similar consideration appeared as a possibility in MNB vice governor Nagy's online presentation yesterday.

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