As shockwaves from the eurozone crisis radiate outwards, Hungary has felt the full force of their impact. Budapest has endured three difficult bond auctions in a week, yields have shot up, and the forint has tumbled to record lows.
According to portofolio.hu, the demand for Hungarian government bonds was stronger at yesterday’s auctions than two weeks ago, and the Government Debt Management Agency (AKK) has sold HUF 46 bln worth of debt against the originally planned HUF 38 bln at average yields 61-78 higher than a fortnight ago. As Wall Street Journal informs, French and Spanish borrowing costs shot up on Thursday as the spread between their bonds and those of Germany hit a record high despite political leaders’ promises to end the euro zone debt crisis. The spread between 10-year French bonds and the equivalent German bund hit 200.6 basis points, or 2.006 pc. Spain’s spread hit 489.5 basis points, or 6.649 pc, another record for the single currency era. Shares of large European companies have reached the lowest level in five weeks, from mid-session on Thursday, after the increase in bond yields in the euro area countries to expand the amplified fears debt crisis in countries with economies larger and stronger.