Hungary bond outlook hinges on euro roadmap as AKK sees room for yields to fall
Hungary is preparing to unveil its 2027 budget and a fiscal path toward euro adoption later this month, a plan that investors are treating as a key test for the country's debt market. Bond yields have already dropped sharply this year on expectations of tighter fiscal policy, leaving further gains dependent on whether the government delivers a credible deficit-cutting strategy.
Highlights
- Hungary's 10-year bond yields dropped 170 basis points in 2024 to about 5.8%, outperforming Polish yields as investors anticipate deficit reduction.
- AKK will maintain a 30% cap on foreign-currency borrowing for 2025 and expects international borrowing to reach approximately 8 billion euros, mainly via FX bonds.
- No FX bond issuance planned for early 2027 as Hungary anticipates receiving 9 billion euros in EU funds after implementing reforms to unlock payments.
Debt market implications and financing plans
According to Reuters, Hungary's 10-year bond yields have fallen 170 basis points this year to below equivalent Polish yields, despite pressure across global bond markets, as investors price in a reduction from a budget deficit that is set to exceed 7% this year. In a favourable scenario, Tardos said long-term yields could fall to around 4% to 4.5% by the time Hungary joins ERM-2, from about 5.8% now.He said AKK plans no major changes to its debt financing strategy next year, including keeping a 30% cap on foreign-currency borrowing. With higher foreign-currency maturities coming due, international borrowing could total about 8 billion euros next year, mostly through foreign-currency bonds, with the remainder from retail bonds or the European Union's SAFE defence instrument.
Tardos said AKK does not plan to issue an FX bond in the first days of 2027 because 9 billion euros in EU funds are due at the end of this year after Hungary rolled back Orban-era anti-democratic reforms. He added that a broader investor base, including buyers focused on lower-yielding euro zone assets and investors returning after years on the sidelines, has helped Hungary absorb volatility linked to the Iran war and rising global bond yields.
Our earlier article on the global bond selloff highlighted how rising sovereign yields in major developed markets—led by a surge in the U.S. 10-year Treasury—were pushing government borrowing costs to multi-decade highs and tightening financial conditions. We also noted that large budget deficits, heavy funding needs (including AI-related capital demand), and limited appetite for spending cuts were amplifying volatility and forcing broader asset repricing across equities and credit.
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
