UPDATE 1-Hungary bond sale well-bid, but yields broadly higher

                                
 * Hungary sells all HUF 50 bln bonds, bids strong
                                
 * Yields rise from two weeks ago
                                
 * Debt agency: auctions show yield levels stabilising
                                
 
  (Adds trader, debt agency comments, background)
                                
 BUDAPEST, June 17 (Reuters) - Hungary successfully sold 50
billion forints ($218 million) of bonds on Thursday with bids
2-3 times the offer for each paper, although yields on
shorter-dated paper were sharply higher than two weeks ago due
to worries over its budget.
                                
 Yields on three-year bonds maturing in 2013 rose almost 70
basis points in response to a sell-off earlier this month due to
loose talk by some officials, who suggested that Hungary could
go the way of debt-laden Greece. 
                                
 But both the relative success of the auction and the fact
that longer-dated average yields rose far less -- 40 basis
points on 2016 paper and 30 bps on 2020 -- suggested plans
announced since have calmed markets somewhat.
                                
 The forint <EURHUF=> jumped after the auction.
                                
 "The auction results are clearly better than expected. We
suspect that one or two investors, probably Hungarians, bought
the bulk (of the bonds)," a Budapest based trader said.
                                
 "Before the auction, there was some selling in the secondary
market. The 2020/A (yield) was pulled up to 7.69 percent, the
2016/C became one of the cheapest bonds at 7.40 percent. The
2013/E did not cause a surprise, it was sold (at the auction) at
mid-market (yields)."
                                
 For details of the auction results see [
                                
 Average yields achieved at the auctions were slightly below
secondary market levels prior to the auctions, with the 2016/C
paper -- which had a 2.84 bid-to-cover ratio -- sold about 10
basis points below the secondary market level.

                                
 "Demand was good, the auctions were successful," the Debt
Office's Deputy CEO Andras Laszlo Borbely told Reuters. 
                                
 "This shows that there are no problems in the local debt
market," he added. "There had been a trend when there was
uncertainty, but yields have started to stabilise."
                                
  Borbely noted that Hungary's net government bond sales this
year rose to around 300 billion Hungarian forints, while net
Treasury bill sales were in the negative.
                                
 For analysis on Hungary's govt pls see [ID:nLDE65F1SB','yes')">ID:nEAP000755}
                                
 
                                
 FINANCE WORRIES
                                
 Yields on forint-denominated debt are, however, not expected
to come down substantially in the near term.
                                
  The centre-right government which took office in May has
pledged to retain its predecessor's 2010 budget deficit target,
3.8 percent of GDP, to regain the trust of markets, but
investors still want to see more details of the plan.
                                
 "Regarding the amounts sold we can say that the auctions
were a success. Whoever had the money to buy at these levels may
have struck a good deal... although we expect continuing
range-trading rather than yield falls," one trader said.
                                
 Average yields achieved at the auctions were slightly below
secondary market levels prior to the auctions, with the 2016/C
paper -- which had a 2.84 bid-to-cover ratio -- sold about 10
basis points below the secondary market level.
                                
 "Demand was good, the auctions were successful," the Debt
Office's Deputy CEO Andras Laszlo Borbely told Reuters. 
                                
 "This shows that there are no problems in the local debt
market," he added. "There had been a trend when there was
uncertainty, but yields have started to stabilise."
                                
  Borbely noted that Hungary's net government bond sales this
year rose to around 300 billion Hungarian forints, while net
Treasury bill sales were in the negative.
                                
 For analysis on Hungary's govt pls see [ID:nLDE65F1SB]
                                
 For a factbox on Hungary's debts [ID:nLDE65509Z]
                                
 For analysis on Hungary economy [ID:nLDE65924H]
                                
(Reporting by Krisztina Than and Sandor Peto; editing by
Patrick Graham)