MAGYAR NEMZETI BANK
200
1,000
100
500
0 Dec 2020
Nov 2020
Oct 2020
Sept 2020
Aug 2020
Jul 2020
Jun 2020
May 2020
Apr 2020
0
Monthly contracted amount Cumulated contracted amount (right axis)
Note: Based on data received by 18 February 2021. Source: MNB
To increase the liquidity of the corporate bond market, the central bank launched the Bond Funding for Growth Scheme (BGS) on 1 July 2019, as a complement to its unconventional monetary policy instruments and FGS fix. Within the framework of this programme, the central bank purchases bonds with a credit rating of at least B+ issued by non-financial corporations domiciled in Hungary. The surplus money supply that emerges in the banking system as a result of the central bank purchases under the BGS is sterilised by the MNB with the preferential deposit facility. The aim, framework and operation of the BGS relies heavily on the ECB’s corporate sector purchase programme (CSPP). Several of the BGS’ key initial parameters were modified in 2020. As the 2019 results of the bond programme were instrumental in expanding the liquidity of the corporate bond market and fostering diversification in corporate borrowing, the Monetary Council increased the original total amount of HUF 300 billion allocated for central bank bond purchases to HUF 450 billion effective from 1 January 2020. To ensure that the necessary funds are available to Hungarian businesses despite the negative real economy and financial market consequences of the pandemic, on 7 April 2020 the Monetary Council approved an increase in the maximum maturity of the securities purchased under the bond programme from 10 to 20 years and in the maximum exposure of the central bank to
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ANNUAL REPORT • 2020
Chart 6 Contribution of the Bond Funding for Growth Scheme to the Hungarian non-financial corporations’ bond market 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0
HUF Billions
HUF Billions Start of BGS purchases
2020 Q4*
1,500
2020 Q3
300
In 2020, 36 companies successfully issued a total of 37 bond series under the BGS, raising funds over HUF 576 billion, of which the total face value of the MNB’s purchases was over HUF 355 billion. The corporate bonds issued in 2020 have maturities between 7 and 11 years, although most BGS securities series have a maturity of 10 years. Since the launch of the bond programme, a total of 46 companies have issued 53 bond series, allowing the firms to raise HUF 889 billion. The face value of the central bank’s bond purchases was close to HUF 543 billion. Thanks to the issues under the bond programme, the Hungarian market for non-financial corporations successfully continued its convergence started in 2019 to the average of the bond markets in the CEE region.
2020 Q2
2,000
2020 Q1
HUF Billions
2019 Q4
HUF Billions
2019 Q3
400
2019 Q2
Chart 5 Utilisation of FGS Go! in 2020
a corporate group from HUF 20 billion to HUF 50 billion. In view of the robust demand for the bond programme and the high utilisation of the allocated HUF 450 billion, the MNB decided to raise the total amount of funds available for bond purchases to HUF 750 billion in September 2020.
2019 Q1
FGS, the total outstanding amount was HUF 2,152 billion at the end of 2020.
1,800 1,600 1,400 1,200 1,000 800 600 400 200 0
Bond market outside of the BGS Contribution of the BGS to the bond market
* 2020 Q4 data on the bond market outside the BGS are based on estimates. Note: based on securities market statistics available on 27 January 2021. Source: MNB.
3.2 STABILITY OF THE FINANCIAL INTERMEDIARY SYSTEM Despite the negative economic impacts of the pandemic, household and corporate credit expanded in 2020, with the general moratorium on payments introduced in March 2020 and extended until the end of June 2021, as well as the new phase of the Funding for Growth Scheme (FGS) called
