By Gergo Racz
More than 10% of Hungary’s sovereign debt is owned by a single buyer, Franklin Templeton Investments. The fund, controlled by emerging markets investment guru Mark Mobius holds 1 trillion forints ($4.4 billion), making the company Hungary’s biggest lender, business daily Napi Gazdasag reported.It is unclear whether the news is good or bad.
“It’s fundamentally good news, since Templeton is an established and reputable fund, and the person of Mark Mobius is in itself a guarantee,” said Gergely Suppan , analyst at Takarekbank. He added that Templeton has long been present in Hungary and is known to overweight Hungarian assets and generally hold a positive view of the market.
A bond trader in Budapest was more cautious. “Its really 50-50,” he said.
His comment underlines the doubts. On the one hand, it may be a positive for Hungary to have a single, embedded investor controlling such a substantial amount of debt since it can have a stabilizing effect. On the other hand, if an investor with such sizeable portfolio of Hungarian bonds opts to start selling en masse, it could have disastrous consequences, especially in a market like Hungary’s that is short of liquidity.
Seeing Templeton’s extended presence in Hungary, it is more likely that the fund has long term plans, it will wait for its bonds to mature or sell at beneficial rates and increase its holding if panic strikes, a trader told Napi Gazdasag.
Source: The Wall Street Journal / Europe / Emerging Europe