The MNB still sees reserves in the Growth Bond Program

Prior to the launch of the Growth Bond Program (NCP) in July 2019, the absolute dominance of bank loans in the debt of domestic companies was observed. In an interview published in the Wednesday issue of the paper, Máté Lóga explained that the level of the corporate bond market as a share of GDP was 1 percent at that time. has increased fivefold in nominal terms since its inception.

Thanks to the NKP, the domestic bond market has caught up with the regional average from the army driver position in the regional comparison. In addition to the deepening of the market, we are also seeing healthy progress in its structure, both in terms of the number of issuers and the concentration of the sector, he added.

Crisis management was not the original goal of launching the program, but the NCP should be seen as a tool for a long-term capital market development strategy, he said. At the same time, during the pandemic, the Monetary Council decided on several occasions to fine-tune some of the terms of the bond program, so the program played a significant role in keeping the corporate sector stable even during the crisis, he added.

Since the beginning, the MNB has increased the amount of the program several times, currently by HUF 1,550 billion. So far, about two-thirds of the fund has run out, so there is still room for further bond issues, said Máté Lóga. He noted that to date, sixty-six companies have successfully covered the path to bond issuance, with a few of them launching several series, and the total corporate funding is close to HUF 1,670 billion. “We expect bond issuance by companies that have already joined the program or by newcomers to continue,” he said.

He also talked about the fact that central bank purchases under the bond program cause targeted excess liquidity, but the monetary policy stance of the program is neutral, as the excess money generated by MNB purchases has been completely sterilized through the preferential deposit facility. its effect is also filtered out.

The experience of the last two years shows that the issuing companies have mainly spent the funds involved on investments and acquisitions. In the case of the latter, there is room for further acquisitions, but the role of M&A consultants in this issue should also be strengthened, as they have an insight into which companies in the continent could be potential acquisition targets for Hungarian companies. “We see that the NCP also has a positive effect on Hungary’s balance of payments position. We estimate that about 15 percent of the funds raised by companies in the program were spent on foreign acquisitions of domestically owned companies, which could improve the balance of payments in the future through remittances. “In the absence of bond issuance, this financing would have been provided to some extent by foreign companies, which could have had a negative impact on financial stability in addition to the balance of payments position,” he said.

Cover image: Getty Images

Source: – Üzlet by

*The article has been translated based on the content of – Üzlet by If there is any problem regarding the content, copyright, please leave a report below the article. We will try to process as quickly as possible to protect the rights of the author. Thank you very much!

*We just want readers to access information more quickly and easily with other multilingual content, instead of information only available in a certain language.

*We always respect the copyright of the content of the author and always include the original link of the source article.If the author disagrees, just leave the report below the article, the article will be edited or deleted at the request of the author. Thanks very much! Best regards!