BUDAPEST: Hungarian bonds firmed slightly on Thursday as relatively high yields at government debt auctions in Budapest and Bucharest drew healthy demand.
Hungary sold bonds worth 88 billion forints ($309 million) at its auctions, more than the 55 billion forint amount originally offered.
After the auction, yields stayed flat in the secondary market, slightly below Wednesday's levels at about 15 basis points lower than at an auction two weeks ago, with the 10-year paper trading at 3.74 percent.
Earlier this month, a rise in long-term yields made the Hungarian yield curve the steepest in at least 14 years as a rise in US yields added to worries that the Hungarian central bank would lag others in tightening policy.
The European Central Bank, closely watched by rate setters and investors in Central Europe, reiterated on Thursday its plan to wind down its stimulus despite concerns over economic growth and political tension over Italy's increased budget deficit target.
Polish government bond yields edged up 1-2 basis points, with the 10-year paper trading at 3.19 percent, tracking a similar rise in German and US yields.
Hungarian bonds, however, remained well-bid.
They are supported by liquidity from interest rate payments on government debt and the expiry of a bond, one Budapest-based fixed income trader said.
Bucharest also sold more bonds than planned at an auction.
The papers, which will expire in March 2022, were sold at an average yield of 4.62 percent, up from 4.22 percent at a tender held five weeks ago.
The government has sold more bonds than planned at this month's auctions due to its high funding needs in the last quarter of the year, Raiffeisen analyst Silvia Rosca said in a note.
Bucharest's main stock index continued to retreat from last week's five-month highs, and fell 1.6 percent.
Central European shares were mixed after initial losses as European equities markets including Frankfurt also rebounded from an early decline.
The Romanian index, however, was driven lower by a 3.7 percent fall in the shares of OMV Petrom, a unit of Austrian energy group OMV.
The parent company said late on Wednesday that it had postponed an investment decision on its Black Sea exploration project until next year because the Romanian government had taken too long to set the framework conditions.
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