BUDAPEST (Reuters) -Hungary has issued foreign currency benchmark bonds worth a total of $3.8 billion, which will help it preserve economic stability, Finance Minister Mihaly Varga said on Thursday.
The bond issue comes after Hungary on Tuesday lifted its 2022 foreign currency borrowing target by the equivalent of 2.5 billion euros amid a stand-off with the European Union over Hungary's access to EU recovery funding.
The EU's executive Commission froze access to the funds for Hungary and Poland over their nationalist governments' track record of undercutting democratic norms by restricting the rights of migrants, the LGBTQ community, as well as increasing state control over media and the courts.
Varga said in a post on Facebook (NASDAQ:FB) that the funds raised via the bond issues would be used "for preserving the country's stability, early repayments and boosting financial reserves".
The debt agency AKK said in a separate statement that Hungary had issued dollar-denominated bonds in two tranches - $1.75 billion worth of 7-year bonds at a yield of 5.46%, and $1.25 billion worth of 12-year bonds at 5.829% - and also a 9-year 750 million euro bond denominated in euros at a yield of 4.503%.
"Despite the volatile market environment, investor demand was almost double for the bonds," the AKK said.
Varga said the government would stick to reducing the budget deficit this year and meeting a target of 4.9% gross domestic product (GDP) growth.
Prime Minister Viktor Orban needs to rein in the deficit after a pre-election spending spree and caps on energy bills helped him win a landslide victory in April.
Last month, Hungary announced new windfall taxes worth 800 billion forints ($2.17 billion) on what it called "extra profits" earned by banks, energy companies and other firms to plug the budget gap, adding that some 60% of the deficit adjustment would come from spending cuts at ministries and by postponing some public investment.
($1 = 368.2200 forints)