Hungary sold late last week euro 1.0bn of seven-year bonds in its first issue since joining the European Union in May

Hungary sold late last week euro 1.0bn of seven-year bonds in its first issue since joining the European Union in May. The 3.625 per cent coupon was the lowest from the country to date, reflecting the rally in the EU accession countries' bonds this year. When Hungary sold a euro 1.0bn 2014 issue in January this year, the yield spread over the mid-swap rate was 29 basis points but has now tightened to 12bp over. The new bond was priced to yield 12bp over swaps, offering a small premium for buying a slightly shorter maturity. The spread equates to 27.3bp above the 5.0 per cent July 2011 Bund. "It has been easy for investors to buy the bonds at 29bp and see them tighten to 12bp," said Jonathan Brown, head of emerging markets syndicate at JP Morgan, which managed the sale with Dresdner Kleinwort Wasserstein. "The challenge was to get the investors to buy at the new level of 12bp whilst broadening the investor base throughout Europe," he said. German investors dominated the "comfortably oversubscribed" order book, but to a lesser extent than in previous deals. Accounts in Germany made up 42 per cent of the orders, while Greek, Scandinavian and Italian investors accounted for about 10 per cent each.