Types of government securities

Hungarian Government Bond is an interest-bearing government security with a maturity longer than one year. Currently, it is issued with tenors of 3, 5, 7, 10, 15 or 20 years. The first auctions of the three-year and five-year fixed rate bonds were held on May 2, 1996 and January 30, 1997, respectively. The ten-year fixed rate bond was auctioned for the first time on January 14, 1999, while the first auction of the five-year floating rate bond was on March 19, 1998. The fifteen-year fixed rate bond was introduced on November 8, 2001. The 20-year fixed rate bond was auctioned for the first time on January 16, 2020. Switch auctions for Hungarian Government Bonds were introduced on November 2, 2009.

Coupon of fixed rate government bonds is announced in the respective public offering for all the subsequent interest periods. In case of floating rate bonds, however, only the method and date of coupon re-set are determined in advance and the coupon rate is announced only for the given interest period.

The coupon payment frequency of fixed rate Hungarian Government Bonds can be annual or semi-annual. Government bonds issued after January 2002 pay interest annually.

Hungarian Government Bonds have been sold through auctions since 1996. Only Primary Dealers may participate directly at the Hungarian Government Bonds auctions, investor should submit orders through the PDs.

Hungarian Government Bond will be placed with the maturities specified in the issuance plan, in the auctions held on Thursdays. Currently, the 3, 5 and 10-year fixed-rate Hungarian Government Bond auctions take place every two weeks, 15 and 20-year fixed-rate Hungarian government bond auctions every three months. Floating-rate bond auctions take place once a month, on the same day as the 12-month Discount Treasury Bill auction. The settlement is always on Wednesday on the week following the week of the respective auction.

On Wednesdays taking into account the market demand, bond switch auctions or buy-back auctions can be held.

The offered amount of the Hungarian Government Bonds at each auction are determined in line with the financing plan.

The denomination of Hungarian Government Bonds is HUF 10,000. Since 12 April, 1999 Hungarian Government Bonds have been issued in dematerialised form. Hungarian Government Bonds are listed on the Budapest Stock Exchange on the date of the settlement. Hungarian Government Bonds are listed also on the multilateral trading system called “MTS Hungary” operated by MTS SpA on the day following the publication of Public Offering preceding the date of the first placement and listed on the regulated market called “Bond Vision Market” operated by MTS SpA on the day of the first placement.

Hungarian Government Bonds are available to resident and non-resident individuals, legal entities and non-incorporated economic associations. Non-residents may buy and sell government securities throughout the whole maturity period under the terms and conditions specified in the relevant Hungarian legislation.

The relevant series of Hungarian Government Bonds issued after 1 June 2019 are exempted from the obligation to pay the social contribution tax set out in Act LII of 2018 on Social Contribution Tax.

List of Primary Dealers involved in trading of government securities:

https://www.akk.hu/securities-issuance-and-trading/primary-dealers

GREEN HUNGARIAN GOVERNMENT BOND

ÁKK Zrt. held its first Green Hungarian Government Bond auction on April 22, 2021, on Earth Day. Currently, fixed rate Green Hungarian Government Bonds maturing in 2031 and 2051 are being issued. The denomination of this security is HUF 10,000.

Hungarian Government Bonds are available to resident and non-resident individuals, legal entities and non-incorporated economic associations. Non-residents may buy and sell government securities throughout the whole period until maturity under the terms and conditions specified in the relevant Hungarian legislation.

The Green Hungarian Government Bonds, similarly to the Hungarian Government Bonds will be sold through auctions, and the procedure related to the sale is the same. The dates of the auctions are published in the current issuance plan.

The amounts collected from the issuance of the Green Hungarian Government Bonds are intended to serve the partial financing of the central budget deficit and the renewal of the debt of the central subsystem of the public finances, in a way that the Issuer intends to use the proceeds to finance or refinance expenditures within the central government budget contributing the transition to a low carbon, climate-resilient and environmentally sustainable economy in line with the Green Bond Framework of the sovereign.

Other documents related to Green Hungarian Government Bonds are available here: https://www.akk.hu/green-bond.

List of Primary Dealers involved in trading of government securities:

https://www.akk.hu/securities-issuance-and-trading/primary-dealers

Discount Treasury Bills are government securities with maturity less than one year. No interest is paid on these securities; instead, they are issued at a discount, however, they may be issued under, at, or above face value. Face value is repaid on the redemption date. The denomination of Discount Treasury Bills is HUF 10,000. Since 12 April, 1999 Discount Treasury Bills have been issued in dematerialised form.

Discount Treasury Bills are available to resident and non-resident individuals, legal entities, and non-incorporated economic associations. Non-residents may buy and sell government securities throughout the whole maturity period under the terms and conditions specified in the relevant Hungarian legislation.

Currently Discount Treasury Bills are issued for different tenors, namely 3, 6 and 12 months, but due to the active secondary market of these securities they are available on the secondary market for practically any possible residual maturity until one year.

Those Discount Treasury Bills which have a remaining maturity of

- up to 135 calendar days being calculated from the date of the settlement are referred to as 3 months Discount Treasury Bills;

- up to 224 calendar days being calculated from the date of the settlement are referred to as 6 months Discount Treasury Bills;

- up to 365 calendar days being calculated from the date of the settlement are referred to as 12 months Discount Treasury Bills.

Discount Treasury Bills with a residual maturity of up to 90 calendar days from the settlement date, originally issued with a residual maturity of 3 or 12 months, issued for a series of 5 Discount Treasury Bills by way of additional placement, with a maturity of less than 91 days are referred to as Liquidity Discount Treasury Bills.

Since the end of 1988 Discount Treasury Bills have been issued at auctions. ÁKK Zrt. organises the auctions of 6-month and 12-month Discount Treasury Bills on a bi-weekly basis, and the auctions of 3-month Discount Treasury Bills on a weekly basis, while the Liquidity Discount Treasury Bills are organised occasionally, at the decision of ÁKK Zrt.

Discount Treasury Bills will also sold in weekly exchange auctions starting from 13 May 2024, based on the current financing plan and market situation.

Only Primary Dealers may participate directly at the Hungarian Government Bonds auctions, investor should submit orders through the PDs.

ÁKK publishes the serial number, the ISIN-code of the Discount Treasury Bills to be issued, the terms and conditions of the placement of the given series - including especially the amount announced for sale at the auction, the date of the auction and the issuance (performance), the deadline for submitting the bids, the maturity of the securities - in public offering (hereinafter: the “Public Offering”) at least 3 working days prior to the date of the auction.

The Issuer reserves the right to deviate from the quantities announced or to declare the auction unsuccessful, depending on the bids received.

Discount Treasury Bills with an original maturity of more than 92 days are listed on the Budapest Stock Exchange from the date of the settlement, as well as on the multilateral trading system called “MTS Hungary” operated by MTS SpA on the day of the auction and on the regulated market called “Bond Vision Market” operated by MTS SpA on the day of the first auction.

The network of Primary Dealers and the Hungarian State Treasury quotes daily bid and ask prices for the series of Discount Treasury Bills, so they can sell and buy Discount Treasury Bills during the maturity period as described in their rules of operation.

ÁKK Zrt. pays the redemption (the nominal value) to the investors through KELER Zrt. and the investment companies.

The Issuer and ÁKK Zrt. reserve the right to issue from time to time additional Discount Treasury Bills, which shall constitute a series identical to the relevant Discount Treasury Bill series, with rights identical in all respects to those of the series of Discount Treasury Bills, except for the date of issue.

ÁKK Zrt. will publish announcements relating to the issuance of Discount Treasury Bills on its websites (www.akk.hu and www.allampapir.hu) and on the website of BSE (www.bet.hu), as well as on the website of the MNB (kozzetetelek.mnb.hu).

Any conditions on tax accounting or tax consequences related to Discount Treasury Bills can only be judged on the basis of the specific circumstances of the investor concerned and may change subject to tax legislation.

Interest income on series of Discount Treasury Bills put into circulation after 1 June 2019 is not considered as income and is therefore exempt from interest tax. The relevant series of Discount Treasury Bills issued after 1 June 2019 are exempted from the obligation to pay the social contribution tax set out in Act LII of 2018 on Social Contribution Tax.

List of Primary Dealers involved in trading of government securities:

https://www.akk.hu/securities-issuance-and-trading/primary-dealers

former name Premium Hungarian Government Bond (PMÁK)

Premium Hungarian Government Security (PMÁP) is a registered floating rate, inflation-linked government security. Series issued on and after 30 September 2022 have a face value of HUF 1.*

The annual interest rate – except for fixed interest periods of certain series** – is calculated as a sum of theinterest base and a different interest rate premium per series. The interest base for the given interest period equals to the previous year’s average Hungarian “Consumer Price Index” published by KSH (Hungarian Central Statistical Office). PMÁP provides a different interest rate premium per series, or even per interest periods. The interest rate and the date of interest rate fixings are defined in the Public Offering of each series.

For series issued on and after 30 September 2022, a Sales Cap has been set for dealers, the amount of which will be specified in the Offering Circular and in the Public Offering of certain series.

The interest period is one year and the interest amount is paid on the last day of each period. The repayment of the principal is due in one lump sum at maturity.

PMÁP can be purchased and transferred by resident and non-resident individuals. Persons eligible to acquire the PMÁP on the primary market may purchase and transfer the PMÁP among themselves on the secondary market after the placement.

No interest tax will be charged on series issued after 1 June 2019, and series of PMÁP issued after the same date are also exempted from the obligation to pay the social contribution tax set out of Act LII of 2018 on Social Contribution Tax.

For terms and conditions of each series, please get informed from the Public Offering and Offering Circular of the relevant series.

The security can be bought and sold in the branch network of the Hungarian State Treasury, through its electronic platform called WebTreasury, and in the branch network of the following dealers: CIB Bank Zrt., Concorde Értékpapír Zrt., Erste Befektetési Zrt., Equilor Befektetési Zrt., Gránit Bank Zrt., K&H Bank Zrt., MBH Befektetési Bank Zrt. (formerly MTB Magyar Takarékszövetkezeti Bank Zrt.), MBH Bank Nyrt. (formerly MKB Bank Nyrt)., OTP Bank Nyrt., Raiffeisen Bank Zrt. and UniCredit Bank Hungary Zrt.

*Earlier series were issued with a HUF 1,000 denomination

**Series 2027/J, 2029/I, 2029/J, 2032/I, 2032/J, 2035/I1, 2035/I2

former name Bonus Hungarian Government Bond (BMÁK)

Bonus Hungarian Government Security (BMÁP) a registered floating rate government security with different tenors. The denomination is HUF 1. The annual interest rate is equal to the sum of the interest base and the interest rate premium. The date of interest rate fixings and the interest rate premium are set in the public offering.

Sales of BMÁP was suspended between 1 June 2019 and 29 September 2022.

The interest payable consists of the base interest rate and the interest premium. For series issued on and after 30 September 2022 the interest base for the given interest period equals to the weighted average of the average yields of the previous four successful auctions of the 3 month Discount Treasury Bills. These series pay interest every three months, and interest amount is paid on the last day of each such period.* The date of interest rate fixings and the interest rate premium are set in the Public Offering.

For the series issued on and after 30 September 2022, a Sales Cap has been set for dealers, the amount of which will be specified in the Offering Circular and in the Public Offering of certain series.

BMÁP sold within a time frame designated by the issuer and all the security of the same series has the same maturity. The repayment of the principal is due in one lump sum at maturity. For series issued on and after 30 September 2022, no interest tax will be charged.

The relevant series of Bonus Hungarian Government Securities issued after 1 June 2019 are exempted from the obligation to pay the social contribution tax set out of Act LII of 2018 on Social Contribution Tax.

BMÁP can be purchased and transferred by resident and non-resident individuals. Persons eligible to acquire the BMÁP on the primary market may purchase and transfer the BMÁP among themselves on the secondary market after the placement.

For terms and conditions of each series, please get informed from the Public Offering and Offering Circular for that series.

The security can be bought and sold in the branch network of the Hungarian State Treasury, through its electronic platform called WebTreasury, and in the branch network of the following dealers: CIB Bank Zrt., Concorde Értékpapír Zrt., Erste Befektetési Zrt., Equilor Befektetési Zrt., Gránit Bank Zrt., K&H Bank Zrt., MBH Befektetési Bank Zrt. (formerly MTB Magyar Takarékszövetkezeti Bank Zrt.), MBH Bank Nyrt. (formerly MKB Bank Nyrt.), OTP Bank Nyrt., UniCredit Bank Hungary Zrt., Raiffeisen Bank Zrt.

*For series issued before 1 June 2019 the interest base for the given interest period equals to the weighted average of the average yields of the previous four successful auctions of the 12 month Discount Treasury Bills. These series were issued with a 4, 6, and 10-year maturity and the series pay interest anually, and interest amount is paid on the last day of each such period.

The securities are issued with the tenor of 5 years, with the denomination of HUF 1 and with fixed interest rates pre-determined for each interest period. From 3 June 2024, it is issued by means of a tap issue.* The Hungarian Government Bond Plus may be purchased during the sales period at a net price of 100% plus accrued interest.

The interest is allocated annually.** On the day of the interest allocation (except for the last one on the maturity date) government securities of the same series (in MÁP Plusz) will be credited to the securities account of the holder of MÁP Plusz at the face value identical to the amount of interest. At the maturity, on the last interest allocation date the holder of MÁP Plusz entitled to the amount of interest in forint.

Within the 5 business days periods after each interest allocation day, the dealers quote a net purchase price of 100% (without loss on capital) and the accrued interest calculated according to the date of purchase. On other business days, the dealers quote their purchase prices to the series of Hungarian Government Security Plus according to their terms and conditions. Consequently, MÁP Plusz can be sold during its tenor.

For the MÁP Plus series, a Sales Cap will be set for the dealers from 3 June 2024, the amount of which is specified in the Public Offering of certain series.

No interest tax will be charged. The relevant series of MÁP Plusz issued after 1 June 2019 are also exempted from the obligation to pay the social contribution tax set out in Act LII of 2018 on Social Contribution Tax.

Hungarian Government Security Plus can be purchased and transferred by resident and non-resident individuals. Non-residents may acquire and transfer this security in accordance with the effective foreign exchange laws.

MÁP Plusz can be bought and sold in the branch network of the Hungarian State Treasury, through its electronic platform called WebTreasury, and in the branch network of the following dealers: CIB Bank Zrt., Concorde Értékpapír Zrt., Equilor Befektetési Zrt., Erste Befektetési Zrt., Gránit Bank Zrt., K&H Bank Zrt., MBH Bank Nyrt. (formerly MKB Bank Nyrt.), MBH Befektetési Bank Zrt. (formerly MTB Magyar Takarékszövetkezeti Bank Zrt.), OTP Bank Nyrt., UniCredit Bank Hungary Zrt., Raiffeisen Bank Zrt.

*The series traded until 31 May 2024 were sold by subscription.

**For series sold up to 31 May 2024, interest is paid semi-annually in the first year and annually thereafter.

The „Residency Bond” program was closed on 31 March 2017.

Information about Section 28 (3)-(7) of the amendments to Act No. 2 of 2007 on the Admission and Right of Residence of Third-Country Nationals (the “Act”)

Information for applicants for residence permits in Hungary

The so-called “Residency Government Bonds” are zero-coupon government securities was issued after January 1, 2015 with denominations of EUR 50.000 for a tenor of minimum 5 years in accordance with the separate Decree of the Minister for National Economy. The Residency Government Bonds was issued at a discounted price and will be redeemed at par value at maturity. The yield of the Residency Government Bond is calculated in accordance with respective rules of law as a difference between the par value and the discounted price.

The Residency Government Bonds could be subscribed by such companies that invest exclusively into Residency Government Bonds and had signed an agreement with the Government Debt Management Agency private Company Limited by Shares (“ÁKK Zrt.”) for such activity.

In accordance with Section 110.§ (11) of the Act in connection with applications submitted after January 1, 2015 an aggregate par value of 300,000 euro of Hungarian Residency Government Bonds was subscribed (bought) per applicant.

The company as specified above issued a security with at least five years of tenor of which (and not of the Residency Government Bonds) the applicant for a permission of residence in Hungary was hold not less than EUR 300.000 of face value for minimum 5 years. The specific terms of these securities (especially the interest rate or yield) are not specified by the laws of Hungary. The company should have had all licences required to carry out such activities in the relevant country.

The approval for the company was granted by the Economic Committee of the Hungarian Parliament. Having received such necessary approval of the committee, the company should have sign an agreement with AKK Zrt. for the issuance of the Residency Government Bonds (issuance by the State and purchase by the Company). The list of approved companies is published on the website of ÁKK Zrt. (the list can be downloaded here)

With questions related to residence permits applicants should contact the Office of Immigration and Nationality of Hungary (by phone: +361 4639100, by e-mail: migracio@bah.b-m.hu, or by mail: Customer Service Office No.2, H-1117 Budapest, Budafoki út 60. / Sztregova köz).

Information for potential immigration service provider companies

In conformity with the Act the so-called “Residency Government Bonds” could be purchased exclusively by companies, which in turn was issued securities accordingly for the prospective applicants. Only one such company per a third country was approved by the Economic Committee of the Hungarian Parliament. The contact details are the following: by phone: +361 4414567, by fax: +361 4414560, or by e-mail: gb@parlament.hu.

List of approved enterprises (The number of resolution of the Economic and Information Technology Committee of the Hungarian Parliament)

Hungary State Special Debt Fund (89 Nexus Way, Camana Bay, Grand Cayman KY1-9007)

(Resultion of the Committee no. 5/2010-2014., Resultion of the Committee no. 8/2010-2014., 22/2010-2014. sz. bizottsági határozat, Resultion of the Committee no. 27/2014-2018.)

Discus Holdings Ltd (158, Merchants Street, Valetta, VLT1176, Málta; korábbi székhelye:236, St. Paul Street, Valletta, VLT1215, Málta)

(Resultion of the Committee no. 9/2010-2014., Resultion of the Committee no. 13/2010-2014., Resultion of the Committee no. 20/2010-2014.)

The Framework Contract was terminated based on the resolution of the Committee no. 13/2014-2018 dated 15th December 2015.

Innozone Holdings Limited (195 Arch. Makariou III Avenue, Cy-3030 Limassol, Cyprus)

(Resultion of the Committee no. 10/2010-2014., Resultion of the Committee no. 14/2010-2014.)

Arton Capital Hungary Pénzügyi Tanácsadó Kft. (1065 Budapest, Hajós utca 25; korábbi székhelye:1068 Budapest, Székely Mihály utca 8.)

(Resultion of the Committee no. 11/2010-2014., Resultion of the Committee no. 19/2010-2014., Resultion of the Committee no. 2/2014-2018., Resultion of the Committee no. 20/2014-2018., Resultion of the Committee no. 28/2014-2018.)

VolDan Investments Limited (Schaan)

(Resultion of the Committee no. 15/2010-2014., Resultion of the Committee no. 21/2014-2018.)

EURO-ASIA Investment Management Pte Ltd (28C Stanley Street Singapore)

(Resultion of the Committee no. 17/2010-2014.)

The Framework Contract was terminated based on the resolution of the Committee no. 14/2014-2018 dated 15th December 2015.

S&Z program Limited (Schaan)

(Resultion of the Committee no. 16/2010-2014.)

The Framework Contract was terminated based on the resolution of the Committee no. 1/2014-2018 dated 25th September 2014.

MIGRAT IMMIGRATION ASIA Ltd. (Chalkidonos 10, 3070 Limassol, Ciprus)

(Resultion of the Committee no. 19/2014-2018.)

Resultion of the Committee no. 32/2014-2018., which was withdrawn with the resolution of the Committee no. 33/2014-2018.dated 7th November 2016.