China may buy debt of Hungary
December 31st, 2010 | China DailyChina may buy Hungarian government debt, Development Minister Tamas Fellegi said, as the central European nation works to wean itself off emergency loans from the International Monetary Fund (IMF).
China proposed buying the debt when the prime ministers of the two countries met on Oct 31, Fellegi told the news portal Index in an interview published on Thursday. The funding may range from China’s central bank taking part in Hungarian debt auctions to State-owned Chinese companies financing specific projects, such as railway development, Index reported.
“The Hungarian prime minister welcomed this” and delegations from the two countries will take up the issue in January in Hungary, Fellegi said, according to Index.
The ministry has “no additional comment” on the Index interview, spokeswoman Melinda Kamasz said.
Hungary, the European Union’s most indebted eastern member, opted against a new IMF loan after its 20 billion-euro ($26 billion) bailout expired in October. The country intends to rely on the market for financing, Debt Management Agency Deputy Chief Executive Laszlo Andras Borbely said on Dec 21.
Hungary’s gross debt sales will amount to 4.76 trillion forint ($22 billion) next year, compared with 4.25 trillion forint in 2010, according to the Debt Management Agency.
A Chinese debt purchase may not help lower Hungary’s borrowing costs as the conditions of the deal would be less transparent than a pact with the IMF, said Daniel Bebesy, who oversees $1.5 billion at Budapest Investment Management.
China’s foreign currency reserves surged by a record to $2.65 trillion at the end of September.