Risks relating to this Series of the Bonds” in Section 4 “Risk Factors” of this Offering Circular for a risk disclosure relating to CACs.
Statement relating to the Language Used for Information Disclosure
Certain documents prepared by the Issuer for public disclosure with respect to this Series of the Bonds have been made in both English and Chinese. For any inconsistency between the two language versions, the Chinese version shall prevail.
Basic information on the Issuer’s Agent


Government Debt Management Agency Private Company Limited by Shares (“GDMA Pte Ltd.” or “ÁKK”) was found in March 2001 as a single shareholder company (limited by shares). The sole shareholder of ÁKK is the Hungarian State represented by the Minister of Finance. The shares of GDMA Pte Ltd. are non-negotiable securities and are part of the national assets. The operating rules of GDMA Pte Ltd.


are stipulated by law, and its main duty is government debt management, such as organizing the issuance of government bonds on behalf of the Hungarian state in the domestic market or abroad. In accordance with these tasks, the respective law enables GDMA Pte Ltd. to act on behalf of the Hungarian state in government debt management issues, and enables the Minister of Finance to delegate its incumbency right to GDMA Pte Ltd.
Access to Information


Investors may obtain full access to this Offering Circular on the website of the Shanghai Clearing House (http://www.shclearing.com), China Money (http://www.chinamoney.com.cn), Beijing Financial Assets Exchange (http://www.cfae.cn) or at any place, or on any website or through any media as otherwise designated during the offering period of this Series of the Bonds.
Statement relating to the Foreign Currency Translation and Rates of Exchange


Amounts specified in Section 6 “Description of the Issuer” and Section 7 “Principal Economic Data of Hungary” are expressed in HUF, EUR or USD. For illustration purposes only, (i) the CNY/HUF central parity rate published on 30 November 2021 and expressed as the amount of HUF per one CNY was 50.9992, (ii) the EUR/CNY central parity rate published on 30 November 2021 and expressed as the amount of CNY per one EUR was 7.2063, and (iii) the USD/CNY central parity rate published on


30 November 2021 and expressed as the amount of CNY per one USD was 6.3794, each of which was published on http://www.chinamoney.com.cn/index.html by the China Foreign Exchange Trade System (the “CFETS”), a sub-institutional organization of PBOC.
Statement regarding Selling Restrictions


The distribution of this Offering Circular, the offer, sale and delivery of any of this Series of the Bonds may be restricted by law in certain jurisdictions. Persons receiving this Offering Circular are required by the Issuer and the Lead Underwriter to inform themselves about, and to observe, any such restrictions.


For description of certain restrictions on the offer and sale of this Series of the Bonds and on the distribution of this Offering Circular, see Section 10 “Selling Restrictions” of this Offering Circular.


In particular, this Series of the Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (hereinafter, the “U.S. Securities Act”). This Series of the Bonds may not be offered or sold in the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. This Series of the Bonds are being offered outside the United States in reliance on Regulation S under the U.S.


Securities Act.
Notification under Section 309B(1)(c) of the Securities and Futures Act (Chapter 289) of Singapore (the “SFA”): In connection with Section 309B of the SFA and the Securities and Futures


(Capital Markets Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”), the Issuer has determined the classification of this Series of the Bonds as prescribed capital markets products (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).


Neither this Offering Circular nor any supplement thereto constitutes an offer to sell or solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation.
Statement relating to “Bond Connect”


Offshore investors participating in the subscription of this Series of the Bonds through the “Bond Connect” regime should, in connection with the registration, custody, clearing, settlement of this Series of the Bonds and remittance and conversion of funds, comply with applicable laws and regulations, including the Interim Measures for the Connection and Cooperation between the Mainland and the Hong Kong Bond Market published by PBOC, as well as rules of other relevant parties and service providers


.
Statement relating to Governing Law of this Series of the Bonds
This Series of the Bonds are governed by, and any dispute in connection with this Series of the Bonds should be resolved pursuant to, PRC law.
IMPORTANT NOTICE ON ENGLISH VERSION OF THE OFFERING CIRCULAR THIS VERSION OF THE OFFERING CIRCULAR (“ENGLISH OFFERING CIRCULAR”) IS AN ENGLISH TRANSLATION OF THE CHINESE VERSION OF THE OFFERING CIRCULAR (“CHINESE OFFERING CIRCULAR”) WHICH ACCOMPANIES THIS ENGLISH OFFERING CIRCULAR.


THIS ENGLISH OFFERING CIRCULAR
1. IS ONLY PROVIDED FOR THE EASE OF YOUR REFERENCE;
2. IS OF NO LEGAL EFFECT;
3. MAY NOT BE AN ACCURATE TRANSLATION OF THE CHINESE OFFERING
CIRCULAR DUE TO THE DIFFERENCES IN GRAMMAR AND LEGAL TERMINOLOGIES. TERMS OR WORDS USED IN THE CHINESE OFFERING CIRCULARMAY HAVE DIFFERENT MEANINGS OR CONNOTATIONS COMPARED TO THE ENGLISH OFFERING CIRCULAR;
4. IS NEITHER REVIEWED NOR APPROVED BY ANY REGULATORY AUTHORITY (WHETHER IN THE PRC OR ELSEWHERE);


5. MUST NOT BE RELIED UPON IN MAKING ANY DECISION OR TAKING ANY
ACTION OTHER THAN AS A GUIDE AS TO THE CONTENTS OF THE CHINESE OFFERING CIRCULAR.
THE CHINESE OFFERING CIRCULAR PREVAILS OVER THE ENGLISH OFFERING CIRCULAR FOR ALL PURPOSES AND UNDER ALL CIRCUMSTANCES (WHETHER OR NOT ENGLISH OFFERING CIRCULAR AND THE CHINESE OFFERING CIRCULAR ARE INCONSISTENT).


NEITHER THE ISSUER NOR THE LEAD UNDERWRITER MAKES ANY REPRESENTATION OR WARRANTY AS TO THE TRUTHFULNESS OR ACCURACY OF THE ENGLISH OFFERING CIRCULAR. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE ISSUER AND THE LEAD UNDERWRITER DISCLAIM ALL LIABILITY FOR ANY ERRORS, OMISSIONS, DEFECTS OR MISREPRESENTATIONS IN, OR FOR ANY LOSS OR DAMAGE (WHETHER DIRECT OR INDIRECT, AND HOWSOEVER CAUSED) BY ANY PERSON WHO USES OR RELIES ON INFORMATION CONTAINED IN THE ENGLISH OFFERING CIRCULAR.


ANY READER OF THE ENGLISH OFFERING CIRCULAR ACKNOWLEDGES AND AGREES TO THE TERMS OF THIS IMPORTANT NOTICE AND AGREES NOT TO MAKE ANY CLAIM, NOR TAKE ANY ACTION OR PROCEEDINGS, AGAINST THE ISSUER OR THE LEAD UNDERWRITER IN RESPECT OF THE ENGLISH OFFERING CIRCULAR.
CONTENTS
IMPORTANT NOTICE AND STATEMENTS ................................................................................. 1


SECTION 17: PARTIES INVOLVED IN THE OFFERING....................................................... 185
SECTION 18: DOCUMENTS AVAILABLE FOR INSPECTION.............................................. 190
SECTION 1: DEFINITIONS
[SECTION 1: DEFINITIONS
In this Offering Circular, unless otherwise specified or the context otherwise requires, the following terms shall have the following meanings:]


  Beijing Financial Assets Exchange, which is a PBOC authorized platform for the issuance and trading of bonds, a state-owned financial assets transaction platform designated by the Ministry of Finance of the People’s Republic of China, and a transaction platform designated by NAFMII.
“BFAE”


  RMB-denominated bonds to be issued by the Issuer from time to time under the Programme.
“Bonds”


  the holder of this Series of the Bonds, whose names are listed on the registry maintained by the Custody Institution designated by PBOC.
“Bondholders”


"“2021 Catalogue”":"“Bookbuilding”"
"":""
"Green Bond Endorsed Projects Catalogue (2021 Edition) jointly issued by PBOC, the National Development and Reform Commission and the China Securities Regulatory Commission on 21 April 2021.":""
"":"the process of determining the final interest rate/price and"
  placement by the Bookrunner through recording the interest
rate/price and quantity of this Series of the Bonds to be subscribed
by the Underwriting Syndicate and investors, in accordance with
an agreed method of pricing and placement, after the Issuer and
the Lead Underwriter have determined the range of interest
rate/price and the members of the Underwriting Syndicate have
issued a subscription order. The Bookbuilding for this Series of
the Bonds will be undertaken through a centralized online process
at BFAE’s central bookbuilding system.
  Bank of China Limited as the bookrunner, the institution
“Bookrunner”


"“2021 Catalogue”":""
"":""
"Green Bond Endorsed Projects Catalogue (2021 Edition) jointly issued by PBOC, the National Development and Reform Commission and the China Securities Regulatory Commission on 21 April 2021.":""
"":"responsible for the Bookbuilding of this Series of the Bonds,"
including all aspects of centralized bookbuilding such as
formulating the centralized bookbuilding workflow and
specifically operating the centralized bookbuilding.


  a day (other than a statutory holiday in the PRC) on which commercial banks are open for corporate business in Beijing, the PRC and the Custody Institution is open for trading, clearing and settlement of bonds
“Business Day”

“BSE”  Budapest Stock Exchange Limited.

  Collective Action Clauses.
“CACs”
  Council of Europe Development Bank.
“CEB”

  CICERO Shades of Green AS.
“CICERO”


In this Offering Circular, unless otherwise specified or the context otherwise requires, the following terms shall have the following meanings:
[In this Offering Circular, unless otherwise specified or the context otherwise requires, the following terms shall have the following meanings:
	discloses to investo


rs certain information relating to this Series of the Bonds.
“PBOC”	People’s Bank of China, the central bank of China.
“Post-issuance Manager”	Bank of China Limit


ed, the institution responsible for advising the Issuer on the performance of its on-going obligations under this Series of the Bonds.
“Programme”	Hungary’s 2021 RM


B Green Bonds Issuance Programme, under which the Issuer may, from time to time for a period of up to two years from the date of issuance by NAFMII of a notice of acc


eptance of registration with respect thereto, issue Bonds in an aggregate principal amount not exceeding RMB3 billion.
“Regulation S”	Regulation S under the U.S. Se


curities Act.
“Renminbi” or “RMB”	Renminbi, the lawful currency of the PRC.
“Reserved Matters”	as defined in Term (36) under the part “1. Terms of this Series of


the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” of this Offering Circular.
“Second Party Opinion”	an opinion issued by CICERO,


a specialist appointed by the Issuer, confirming that the Green Bond Framework and intended use of proceeds on Eligible Green Expenditure are aligned with the Green


Bond Principles published by ICMA.
“Terms”	The terms of this Series of the Bonds as set out under the heading “1. Terms of this Series of the Bonds” in Section 5 “T


erms of this Series of the Bonds and Offering Arrangements” of this Offering Circular and any reference therein to a particularly term.
“Third Party Certification I


nstitution”	China Lianhe Equator Environmental Impact Assessment Co., Ltd.
“Third Party Certification Report”	the assurance report on pre-issuance of Hungary 2021 S


eries 1 RMB Green Bonds (Bond Connect) issued by the Third Party Certification Institution, a specialist appointed by the Issuer, confirming that the intended use of


proceeds on Eligible Green Expenditure are aligned with the 2021 Catalogue.
“this Series of the Bonds”	Hungary 2021 Series 1 RMB Green Bonds (Bond Connect) to be is


sued by the Issuer and offered under this Offering Circular, which is the first issuance of the Bonds under the Programme.
“Underwriting Syndicate”	The underwriting syndicate organized by the Lead Underwriter for the purpose of underwriting this Series of the Bonds, consisting of the Lead Underwriter and other underwriters.
“UN”	United Nations.
“United States” or “U.S.”	United States of America.
“U.S. Securities Act”	U.S. Securities Act of 1933, as amended.
]


"“China” or “PRC”":"“CIETAC”"
"purpose of this reference only, Region, Macau":"Arbitration"
"“China” or “PRC”":"“COVID-19”"
"purpose of this reference only, Region, Macau":""


"“China” or “PRC”":"“Credit Rating Agency”"
"purpose of this reference only, Region, Macau":""
"“China” or “PRC”":"“CSO”"
"purpose of this reference only, Region, Macau":""


"“China” or “PRC”":"“Custody Institution” or “Custody Institution designated by PBOC”"
"purpose of this reference only, Region, Macau":"to as the"


"“China” or “PRC”":"“Designated Disclosure Methods”"
"purpose of this reference only, Region, Macau":"the websites by PBOC Money Assets or methods"


"“China” or “PRC”":"“Disclosure Documents”"
"purpose of this reference only, Region, Macau":"listed under including any"
"“China” or “PRC”":"“EBRD”"
"purpose of this reference only, Region, Macau":""
"“China” or “PRC”":"“EIB”"
"purpose of this reference only, Region, Macau":""


“Eligible Green Expenditures” expenditure within Hungary’s central government budget contributing to Hungary’s transition to a low carbon, climate-resilient and environmentally sustainable economy, as further described in the Green Bond Framework (as defined below).
"“China” or “PRC”":"“ESA”"
"purpose of this reference only, Region, Macau":""
"“China” or “PRC”":"“EU”"
"purpose of this reference only, Region, Macau":""


"“China” or “PRC”":"“Euro”, “EUR” or “€”"
"purpose of this reference only, Region, Macau":"third stage of defined in 3 May 1998"
“FX” foreign exchange.


"“China” or “PRC”":"“GDMA Pte Ltd.” or “ÁKK”"
"purpose of this reference only, Region, Macau":"Company management"


"“China” or “PRC”":"“Government”"
"purpose of this reference only, Region, Macau":""


"“China” or “PRC”":""
"purpose of this reference only, Region, Macau":"the framework for the issuance of green bonds published by"
Hungary, available at https://akk.hu/green-bond, which has been
subjected to external review by CICERO.


"“China” or “PRC”":"“HFSA”"
"purpose of this reference only, Region, Macau":"Hungarian Financial Supervisory Authority."
“Hong Kong”  Hong Kong Special Administrative Region of the People’s
Republic of China


"“China” or “PRC”":"“HUF”, “Forint”, “forint” or “Ft”"
"purpose of this reference only, Region, Macau":"Hungarian Forint, the lawful currency of Hungary."


"“China” or “PRC”":"“IBRD” or the “World Bank”"
"purpose of this reference only, Region, Macau":"International Bank for Reconstruction and Development."
"“China” or “PRC”":""
"purpose of this reference only, Region, Macau":""


"“China” or “PRC”":"“ICMA”"
"purpose of this reference only, Region, Macau":"International Capital Markets Association."
"“China” or “PRC”":""
"purpose of this reference only, Region, Macau":""


"“China” or “PRC”":"“IDA”"
"purpose of this reference only, Region, Macau":"International Development Agency."


"“China” or “PRC”":"“IMF”"
"purpose of this reference only, Region, Macau":"International Monetary Fund."


"“China” or “PRC”":"“Interbank Market”"
"purpose of this reference only, Region, Macau":"The PRC national interbank bond market."


“Interest Payment Date” 16 December of each year during the Interest Payment Period.
“Issuer” or “Hungary”   Hungary, the issuer of the Bonds.


"“China” or “PRC”":"“Lead Underwriter”"
"purpose of this reference only, Region, Macau":"Bank of China Limited."
"“China” or “PRC”":""
"purpose of this reference only, Region, Macau":""


"“China” or “PRC”":"“Maturity Date”"
"purpose of this reference only, Region, Macau":"16 December 2024"


"“China” or “PRC”":"“MNE”"
"purpose of this reference only, Region, Macau":"The Ministry of National Economy of Hungary."
“MoF” or “Ministry of  The Ministry of Finance of Hungary.
Finance”


"“China” or “PRC”":"“NAFMII”"
"purpose of this reference only, Region, Macau":"The National Association of Financial Market Institutional Investors."
“National Bank of Hungary” or “NBH” The Central Bank of Hungary.
“New Constitution”  The Fundamental Law of Hungary adopted by the Parliament of
Hungary on 18 April 2011 and was promulgated on 25 April
2011 and went into effect on 1 January 2012.


"“China” or “PRC”":"“New York Convention”"
"purpose of this reference only, Region, Macau":"United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards concluded in New York on 10 June 1958."


"“China” or “PRC”":"“OECD”"
"purpose of this reference only, Region, Macau":"Organization for Economic Co-operation and Development."


“Offering Circular” or “this Offering Circular”  The “Hungary 2021 Series 1 RMB Green Bonds (Bond
Connect) Offering Circular” prepared by the Issuer for the
purposes of the offering of this Series of the Bonds, which


[“China” or “PRC”	purpose of this reference only, Region, Macau
“CIETAC”	Arbitration
“COVID-19”
“Credit Rating Agency”
“CSO”
“Custody Institution” or “Cu


stody Institution designated by PBOC”	to as the
“Designated Disclosure Methods”	the websites by PBOC Money Assets or methods
“Disclosure Documents”	listed under i


ncluding any
“EBRD”
“EIB”
“Eligible Green Expenditures” expenditure within Hungary’s central government budget contributing to Hungary’s transition to a low c


arbon, climate-resilient and environmentally sustainable economy, as further described in the Green Bond Framework (as defined below).
“ESA”
“EU”
“Euro”, “EUR


” or “€”	third stage of defined in 3 May 1998
“FX” foreign exchange.
“GDMA Pte Ltd.” or “ÁKK”	Company management
“Government”
mework for the issuance of gree


n bonds published by
Hungary, available at https://akk.hu/green-bond, which has been
subjected to external review by CICERO.
“HFSA”	Hungarian Financial Supervis


ory Authority.
“Hong Kong”		Hong Kong Special Administrative Region of the People’s
Republic of China
“HUF”, “Forint”, “forint” or “Ft”	Hungarian Forint, the la


wful currency of Hungary.

“IBRD” or the “World Bank”	International Bank for Reconstruction and Development.

“ICMA”	International Capital Markets A


ssociation.

“IDA”	International Development Agency.
“IMF”	International Monetary Fund.
“Interbank Market”	The PRC national interbank bond market.
“Interes


t Payment Date”	16 December of each year during the Interest Payment Period.
“Issuer” or “Hungary”			Hungary, the issuer of the Bonds.
“Lead Underwriter”	Bank of


 China Limited.

“Maturity Date”	16 December 2024
“MNE”	The Ministry of National Economy of Hungary.
“MoF” or “Ministry of		The Ministry of Finance of Hungar


y.
Finance”
“NAFMII”	The National Association of Financial Market Institutional Investors.
“National Bank of Hungary” or “NBH”	The Central Bank of Hungary.


“New Constitution”		The Fundamental Law of Hungary adopted by the Parliament of
Hungary on 18 April 2011 and was promulgated on 25 April
2011 and went into effect


 on 1 January 2012.
“New York Convention”	United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards concluded in New York on 10 June 1958.

“OECD”	Organization for Economic Co-operation and Development.
“Offering Circular” or “this Offering Circular”		The “Hungary 2021 Series 1 RMB Green Bonds (Bond
Connect) Offering Circular” prepared by the Issuer for the
purposes of the offering of this Series of the Bonds, which


“$”, “US$” or “US dollars” “WHO”]
"":"“PBOC”"
"discloses to investors certain information relating to this Series of the Bonds.":"People’s Bank of China, the central bank of China."


"":"“Post-issuance Manager”"
"discloses to investors certain information relating to this Series of the Bonds.":"Bank of China Limited, the institution responsible for advising the Issuer on the performance of its on-going obligations under this Series of the Bonds."


"":"“Programme”"
"discloses to investors certain information relating to this Series of the Bonds.":"Hungary’s 2021 RMB Green Bonds Issuance Programme, under which the Issuer may, from time to time for a period of up to two years from the date of issuance by NAFMII of a notice of acceptance of registration with respect thereto, issue Bonds in an aggregate principal amount not exceeding RMB3 billion."


"":"“Regulation S”"
"discloses to investors certain information relating to this Series of the Bonds.":"Regulation S under the U.S. Securities Act."


"":"“Renminbi” or “RMB”"
"discloses to investors certain information relating to this Series of the Bonds.":"Renminbi, the lawful currency of the PRC."


"":"“Reserved Matters”"
"discloses to investors certain information relating to this Series of the Bonds.":"as defined in Term (36) under the part “1. Terms of this Series of the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” of this Offering Circular."


"":"“Second Party Opinion”"
"discloses to investors certain information relating to this Series of the Bonds.":"an opinion issued by CICERO, a specialist appointed by the Issuer, confirming that the Green Bond Framework and intended use of proceeds on Eligible Green Expenditure are aligned with the Green Bond Principles published by ICMA."


"":"“Terms”"
"discloses to investors certain information relating to this Series of the Bonds.":"The terms of this Series of the Bonds as set out under the heading “1. Terms of this Series of the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” of this Offering Circular and any reference therein to a particularly term."


"":"“Third Party Certification Institution”"
"discloses to investors certain information relating to this Series of the Bonds.":"China Lianhe Equator Environmental Impact Assessment Co., Ltd."


"":"“Third Party Certification Report”"
"discloses to investors certain information relating to this Series of the Bonds.":"the assurance report on pre-issuance of Hungary 2021 Series 1 RMB Green Bonds (Bond Connect) issued by the Third Party Certification Institution, a specialist appointed by the Issuer, confirming that the intended use of proceeds on Eligible Green Expenditure are aligned with the 2021 Catalogue."


"":"“this Series of the Bonds”"
"discloses to investors certain information relating to this Series of the Bonds.":"Hungary 2021 Series 1 RMB Green Bonds (Bond Connect) to be issued by the Issuer and offered under this Offering Circular, which is the first issuance of the Bonds under the Programme."


"":"“Underwriting Syndicate”"
"discloses to investors certain information relating to this Series of the Bonds.":"The underwriting syndicate organized by the Lead Underwriter for the purpose of underwriting this Series of the Bonds, consisting of the Lead Underwriter and other underwriters."


"":"“UN”"
"discloses to investors certain information relating to this Series of the Bonds.":"United Nations."


"":"“United States” or “U.S.”"
"discloses to investors certain information relating to this Series of the Bonds.":"United States of America."


"":"“U.S. Securities Act”"
"discloses to investors certain information relating to this Series of the Bonds.":"U.S. Securities Act of 1933, as amended."
“$”, “US$” or “US dollars” “WHO”
United States dollars, the lawful currency of the United States. World Health Organization.
SECTION 2: SUMMARY OF THIS OFFERING CIRCULAR


The issuance of this Series of the Bonds has been registered with NAFMII. Registration of the Programme with NAFMII does not constitute an evaluation by NAFMII of an investment in this Series of the Bonds nor an assessment on the risks involved in an investment in this Series of the Bonds.


An investor must, when purchasing this Series of the Bonds, carefully read this Offering Circular and related Disclosure Documents, conduct independent analysis of the truthfulness, accuracy and completeness of disclosed information, make independent judgements on investment value on such basis and bear related investment risks.


The following summary highlights information contained in, and is qualified in its entirety by, the more detailed information appearing elsewhere in this Offering Circular. This summary does not contain all of the information that may be important to you or that you should consider before investing in this Series of the Bonds.


Any decision to invest in any of this Series of the Bonds should be based on a consideration of the entire Offering Circular and the other Disclosure Documents listed under the heading “1. Documents Relating to this Series of the Bonds” in Section 14 “Disclosure Arrangements” as a whole.
1. Overview of Hungary
(1) Basic Information of the Issuer
Chinese name of the Issuer: 匈牙利 (由政府债务管理机构私人股份有限公司代表)


English name of the Issuer: Hungary (Represented by Government Debt Management Agency Private Company Limited by Shares)
Address: Government Debt Management Agency Pte Ltd., Krisztina tér 2, H-1013, Budapest, Hungary
Contact: Capital Markets Department
Tel: +361 488 9428, +361 488 9432
Fax: +361 488 9425
E-mail: capital.markets@akk.hu
Website: https://akk.hu
(2) Ratings by International Rating Agencies


Set forth below are the current ratings assigned by international rating agencies to Hungary as of the date of this Offering Circular.
[Set forth below are the current ratings assigned by international rating agencies to Hungary as of the date of this Offering Circular.
(3) General]


"Rating Agency":"Moody’s"
"Government Bond Rating":"Baa2"
"Outlook":"Stable"
"Rating Agency":"Standard & Poor’s"
"Government Bond Rating":"BBB"
"Outlook":"Stable"
"Rating Agency":"Fitch"
"Government Bond Rating":"BBB"
"Outlook":"Stable"
(3) General


Hungary lies in Central Europe and covers an area of approximately 93,000 square kilometers (“km”). Hungary is bordered by seven countries: Slovakia and Ukraine to the north, Romania to the east, Serbia and Croatia to the south and Slovenia and Austria to the west. The Danube River crosses Hungary, connecting the country with ports on the Black Sea. Hungary has historically been a nexus of social and cultural life and a trade link between Eastern and Western Europe.


Hungary’s capital is Budapest.
As of 1 January 2021, the population of Hungary was approximately 9.7 million. Approximately 70.2%


of the population lived in urban areas and 1.7 million lived in Budapest, which is the political, administrative, cultural and commercial center of Hungary. While approximately 84% of the population is Magyar (or Hungarian), there are minorities of Armenian, Bulgarian, Croat, German, Greek, Polish, Roma, Romanian, Ruthenian, Serb, Slovak, Slovenian and Ukrainian ethnicity.


Hungary is a republic with a representative form of government. In 1989, the previous Constitution was adopted, instituting a multi-party democratic government. On 18 April 2011, Parliament adopted the Fundamental Law of Hungary as the new constitution of Hungary, which was promulgated on 25 April 2011 and went into effect on 1 January 2012. Until 31 December 2011, the country was known as “The Republic of Hungary”.


Pursuant to the Fundamental Law, the country changed its name and is now known as “Hungary”.


In 2020, Hungary’s GDP decreased by 4.7%. Value added by the agricultural industry declined as a result of less favorable weather conditions as compared to 2019, with the sector decreasing by 8.7%. As external demand weakened, value added by the industrial sector (i.e., manufacturing, mining and quarrying and electricity) decreased by 7.0%. Construction decreased by 10.9% as infrastructure investments and home building activities weakened.


The ongoing COVID-19 pandemic and the lockdown measures introduced as a result of the pandemic contributed to the decline of value added in both the industrial and the construction sector. Value added by the services sector fell significantly, the sector’s growth contribution to GDP growth was negative and amounted to 2.0 percentage points.


The COVID-19 pandemic and the resulting lockdown measures affected several service sectors (including accommodation and food service activities and transportation and storage) significantly.


In 2020, domestic use decreased by 2.7%, and consumption decreased by 0.9%. Gross fixed capital formation decreased by 6.9%. Gross capital formation decreased by 7.0%. Positive but declining net exports turned the 2.7% decline of domestic use into a 4.7% decrease of GDP. Exports decreased by 5.9% and imports decreased by 3.5%. Exports decreased to a larger extent compared to imports, indicating a significant deterioration of external demand.


The ongoing COVID-19 pandemic significantly weakened both external and internal demand.


In the first quarter of 2021, Hungary’s GDP decreased by 2.0%. Value added by the agricultural sector increased because weather conditions were more favorable compared to the corresponding period of the previous year, with the sector growing by 2.6%. Value added by the industrial sector (i.e., manufacturing, mining and quarrying and electricity) increased by 3.4% indicating an improving external demand. Construction decreased by 6.3%. The value added by the service sector decreased by 3.0%.


The still ongoing pandemic significantly weakened both external and internal demand.
In the first quarter of 2021, domestic use decreased by 4.7%, and consumption decreased by 2.6%. Gross fixed capital formation increased by 3.0%. Gross capital formation decreased by 11.6% mainly as a result of changes in inventories. Net exports dampened the 4.7% decrease of domestic demand to a moderate 2.0% decrease of GDP. Growth in exports amounted to 3.4%, significantly exceeding growth in imports of 0.5%.


Consequently, the growth contribution of the export sector was significant as net exports increased relative to the corresponding period of 2020.


In the second quarter of 2021, Hungary’s GDP increased by 17.8% relative to the corresponding period of the previous year. Value added by the agricultural sector increased because weather conditions were more favorable compared to the corresponding period of the previous year, with the sector growing by 1.3%. Value added by the industrial sector (i.e., manufacturing, mining and quarrying and electricity) increased by 36.6% indicating an improving internal demand. Construction increased by 18.


4%. The value added of the services sector increased by 12.6%. The ongoing pandemic significantly weakened both external and internal demand in the corresponding period of 2020 resulting in a low base.


In the second quarter of 2021, domestic use increased by 11.1%, and consumption increased by 7.0% relative to the corresponding period of the previous year. Gross fixed capital formation increased by 11.7%. Gross capital formation increased by 22.5% partly as a result of changes in inventories. Net exports increased the 11.1% increase of domestic demand to a 17.8% increase of GDP. Growth in exports amounted to 34.2%, significantly exceeding growth in imports of 24.3%. Consequently, the growth contribution of the export sector was significant as net exports increased relative to the


corresponding period of 2020.
For more information on the economy of the Issuer, please refer to Section 6 “Description of the Issuer – the Economy”.
2. Basic Information of the Offering
(1) Name of this Series of the Bonds
Hungary 2021 Series 1 RMB Green Bonds (Bond Connect).
(2) Issuer
Hungary.
(3) Notice of Acceptance of Registration Number
NAFMII Registration No. [2021] RB1.
(4) Registered Amount of the Programme
RMB3 billion.
(5) Amount of this Series of the Bonds to be Issued
RMB1 billion.


(6) Status of this Series of the Bonds
This Series of the Bonds constitute direct, unconditional and unsecured obligations of the Issuer and rank and will rank pari passu, without preference among themselves, with all other unsecured and unsubordinated Public External Indebtedness (as defined in Term (8) under the part “1.


Terms of this Series of the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” of this Offering Circular) of the Issuer, from time to time outstanding, provided that the Issuer shall have no obligation to effect equal or rateable payment(s) at any time with respect to any such other Public External Indebtedness and, in particular, shall have no obligation to pay other Public External Indebtedness at the same time or as a condition of paying sums due on this Series of the Bonds and vice versa


.
(7) Unsecured
This Series of the Bonds are not secured.
(8) Negative Pledge and Covenants
So long as any of this Series of the Bonds remains outstanding, Hungary undertakes that, if it or the National Bank of Hungary creates or permits to subsist any Security Interest upon the whole or any part of its or their assets or revenues, present or future, to secure: (i) any Public External Indebtedness of Hungary having an original maturity of at least one year;


or (ii) any Public External Indebtedness of the National Bank of Hungary having an original maturity of at least one year and incurred on or prior to 31 December 1998, Hungary shall, at the time or prior thereto, secure equally and ratably therewith the obligations of Hungary under this Series of the Bonds.


So long as any of this Series of the Bonds remains outstanding, Hungary shall: (i) continue to procure that either Hungary or the National Bank of Hungary exercises full ownership, power and control over the International Monetary Assets as they exist from time to time;


and (ii) duly obtain and maintain in full force and effect all governmental consents, licenses, approvals and authorizations, and/or make or cause to be made all (if any) registrations, recordings and filings, which may at any time be required to be obtained and/or made in Hungary for the execution, delivery or performance of all obligations arising under this Series of the Bonds and the validity or enforceability thereof.


Each of the terms “Security Interest”, “Public External Indebtedness” and “International Monetary Assets” are defined in Term (8) under the heading “1. Terms of this Series of the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” of this Offering
Circular.
(9) Form of this Series of the Bonds
This Series of the Bonds will be issued in real name book-entry form, to be centrally held in custody by the Custody Institution designated by PBOC.


(10)Tenor of this Series of the Bonds
The tenor of this Series of the Bonds will be three (3) years.
(11)Use of Proceeds


The net proceeds from the offering of this Series of the Bonds will be remitted offshore and converted into Euro to be consolidated into the Issuer’s green funding and will be used for Eligible Green Expenditures under Hungary’s Green Bond Framework, intended to finance or refinance expenditures within Hungary’s central government budget contributing the transition to a low carbon, climate-resilient and environmentally sustainable economy.
(12)Minimum Subscription Amount


The minimum amount to be subscribed by an investor shall be RMB10,000,000 and integral multiples of RMB10,000,000 in excess thereof.
(13)Interest Basis
Interest shall be fixed, based on an annual rate and calculated at simple interest, without any compounding.


If the interest on this Series of the Bonds is required to be calculated for any period less than a year, it will be calculated on the basis of the actual number of days in that period in respect of which payment is being made divided by 365 days or, in a leap year, 366 days.
(14)Interest Rate


The rate of interest on this Series of the Bonds shall be fixed. The final rate of interest shall be disclosed in an announcement made in accordance with the applicable rules and be determined by the Issuer and the Lead Underwriter after the centralized Bookbuilding in respect of this Series of the Bonds. The rate of interest shall not change during the life of this Series of the Bonds.
(15)Bookbuilding Date for this Series of the Bonds
14 December 2021.


(16)Settlement Date for this Series of the Bonds
16 December 2021.
(17)First Trade Date for this Series of the Bonds
17 December 2021.
(18)Interest Payment Period for this Series of the Bonds
From 16 December 2021 to 15 December 2024.
(19)Interest Payment Dates for this Series of the Bonds


Each interest payment date (“Interest Payment Date”) is 16 December of each year during the Interest Payment Period. The first Interest Payment Date shall be 16 December 2022 and the last Interest Payment Date shall be 16 December 2024. If an Interest Payment Date falls on a day that is not a Business Day, it will be postponed to the next Business Day. Additional interest will not be paid as a result of such delay in payment.
(20)Maturity Date for this Series of the Bonds


The Maturity Date is 16 December 2024. If the Maturity Date falls on a day that is not a Business Day, it will be postponed to the next Business Day. Additional interest will not be paid on the
principal of this Series of the Bonds as a result of such delay in payment.
(21)Method of Payment of Principal and Interest


Interest on this Series of the Bonds shall be paid on the Interest Payment Dates. The principal of this Series of the Bonds shall be paid in one lump sum on the Maturity Date. The interest and principal payable in respect of this Series of the Bonds shall be made in accordance with the rules of the Custody Institution designated by PBOC, and shall be completed by the Custody Institution designated by PBOC.


If any Interest Payment Date or the Maturity Date is not a Business Day, the Bondholders will not be paid such interest or principal until the next following Business Day nor any interest or other sum in respect of such postponed payment.


The Issuer shall, for so long as this Series of the Bonds are outstanding, at least five (5) Business Days prior to any Interest Payment Date or the Maturity Date (as the case may be), publish, or procure the publication of, an “Interest Payment Announcement” or “Redemption at Maturity Announcement” through the Designated Disclosure Methods.


The payment of interest and principal of this Series of the Bonds shall be made in accordance with the rules of the Custody Institution, and shall be completed by the Custody Institution.


Any payment made by or on behalf of the Issuer to the Custody Institution or its agent pursuant to the relevant agreement between the Issuer and the Custody Institution for the account of a person in whose name any of this Series of the Bonds is, at the time such payment is made, registered in the register held by the Custody Institution, constitutes for all purposes an absolute and unconditional release and discharge of the Issuer, to the extent of such payment, of all obligations and indebtedness in respect of this Series of the Bonds in relation to which such payment was made


.
(22)Offering Method
This Series of the Bonds will be offered by way of a public offering through centralized Bookbuilding and placement at BFAE.
(23)Target Investors
Any institutional investor in the Interbank Market other than those restricted by the laws or regulations.


Offshore investors participating in the subscription of this Series of the Bonds through the “Bond Connect” regime should, in connection with the registration, custody, clearing, settlement of this Series of the Bonds and remittance and conversion of funds, comply with applicable laws and regulations, including the Interim Measures for the Connection and Cooperation between the Mainland and the Hong Kong Bond Market published by PBOC, as well as rules of other relevant parties and service providers


.
(24)No Early Redemption
The Issuer may not redeem this Series of the Bonds prior to the Maturity Date.
(25)No Put Right
Investors do not have the right to sell this Series of the Bonds back to the Issuer.
(26)Credit Rating
This Series of the Bonds are assigned a credit rating of AAA by the Credit Rating Agency.
(27)Trading


After the completion of the issuance of this Series of the Bonds and confirmation of the rights and obligations relating to this Series of the Bonds, and upon the completion of registration with the Custody Institution designated by PBOC, this Series of the Bonds can be traded on the Interbank Market in accordance with its rules.
(28)Taxation Considerations


All payments of principal and interest in respect of this Series of the Bonds by the Issuer are subject in all cases to applicable PRC tax laws, regulations and directives, which will be borne by the Bondholders.


All payments of principal and interest in respect of this Series of the Bonds shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed by Hungary or any political subdivision or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In that event, Hungary shall pay such additional amounts as will result in the receipt by the Bondholders of such amounts as would have been received by them if no such withholding or deduction had been required, except that no such additional amounts shall be payable in respect of any of this Series of the Bonds presented for payment:


(a) by a holder which is liable to such taxes, duties, assessments or governmental charges in
respect of any of this Series of the Bonds by reason of its having some connection with Hungary other than the mere holding of this Series of the Bonds; or
(b) where such withholding or deduction is imposed on a payment to an individual and is required


to be made pursuant to the European Council Directive 2003/48/EC on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive or the European Council Directive 2014/48/EC amending 2003/48/EC.
Any reference to principal or interest shall be deemed to include any additional amounts in respect of principal or interest (as the case may be) which may be payable under Term (30).
(29)Custody Institution


Shanghai Clearing House, as the Custody Institution designated by PBOC.
(30)Governing Law of this Series of the Bonds and the Debt Obligations Represented by Such Bonds
PRC law.
(31)Dispute Resolution


Any dispute arising from or in connection with any of this Series of the Bonds, including any dispute relating to the existence, validity, interpretation, performance, default, termination, consequences of invalidity and non-contractual obligations, shall be submitted to CIETAC for arbitration which shall be conducted in Beijing in accordance with the CIETAC arbitration rules in effect at the time of the submission of the dispute for arbitration.


The arbitral tribunal shall consist of three (3) arbitrators. Each of the Issuer as a party and the Bondholders participating in the dispute as the other party may appoint any person, whether on the arbitrator list provided by CIETAC or not, as an arbitrator. The arbitration proceedings shall be conducted in both English and Chinese. The arbitral award is final and binding upon both parties.
(32)Event of Default; Event of Acceleration


Under certain circumstances, Bondholders may, by written notice addressed and delivered to Hungary by the holder(s) of at least 25% of the aggregate principal amount of this Series of the Bonds then outstanding, declare all of this Series of the Bonds to immediately become due and payable. Such declaration may be rescinded with the approval of Bondholders. Details of Event of Default and Event of Acceleration and conditions to rescind such declaration are set forth in Term


(35) under the heading “1. Terms of this Series of the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” of this Offering Circular.
(33)Meetings of Bondholders
The Terms of this Series of the Bonds contain provisions for convening meetings of Bondholders to consider matters relating to this Series of the Bonds, including, without limitation, the modification of any provision of certain Terms. Any such modification may be made if, having


been approved in writing by Hungary, it is sanctioned by an Extraordinary Resolution. Details on the meeting of Bondholders (including the definition of the “Extraordinary Resolution”) are set forth in Term (36) under the heading “1. Terms of this Series of the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” and under the heading “3. Meetings of Bondholders” in Section 16 “Investor Protection Mechanism” of this Offering Circular.
3. Risk Factors


Prior to making an investment decision, each prospective investor should carefully consider the risk factors disclosed in this Offering Circular, including but not limited to the following risks:
(1) Risks relating to the Issuer;
(2) Risks relating to this Series of the Bonds; and
(3) Risks relating to Cross-border Offering.


Prior to making an investment decision with respect to this Series of the Bonds, each prospective investor should carefully consider all information disclosed in this Offering Circular, including but not limited to the economic data disclosed elsewhere in this Offering Circular.
4. Enforcement of Arbitral Awards in Hungary


Any dispute arising from or in connection with this Series of the Bonds shall be submitted to CIETAC for arbitration in Beijing in accordance with the CIETAC arbitration rules in effect at the time of the submission of the dispute for arbitration. The arbitral tribunal shall consist of three (3) arbitrators.


Each of the Issuer as a party and the Bondholders participating in the dispute as the other party may appoint any person, whether on the arbitrator list provided by CIETAC or not, as an arbitrator. The arbitration proceedings shall be conducted in both English and Chinese. The arbitral award is final and binding upon both parties.


Such an arbitral award made by CIETAC will be recognized and enforced by a Hungarian court pursuant to the Hungarian law by Law Decree 25 of 1962 (which, subject to the terms thereof, implements the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards concluded in New York on 10 June 1958 (the “New York Convention”)), except in the circumstances where:
(1) the party relying on such arbitral award or applying for its enforcement does not comply with


the requirements set forth in Act No. LIII of 1994 on Judicial Enforcement of Hungary (“Enforcement Act”); or
(2) such recognition or enforcement may be refused by Hungarian courts on the grounds
provided in the New York Convention or the applicable Hungarian laws.


Those requirements and grounds for refusing recognition or enforcement are set forth in Section 3 “Status of this Series of the Bonds and Legal Proceedings”. In addition, the recognition and enforcement of a foreign arbitral award against the Issuer are subject to other various qualifications set forth in Section 3 “Status of this Series of the Bonds and Legal Proceedings”.


Therefore, there is no assurance that the arbitral award rendered by CIETAC against the Issuer can be successfully recognized and enforced in the courts in Hungary.
SECTION 3: STATUS OF THIS SERIES OF THE BONDS AND LEGAL PROCEEDINGS


This Series of the Bonds constitute direct, unconditional and unsecured obligations of the Issuer and rank and will rank pari passu, without preference among themselves, with all other unsecured and unsubordinated Public External Indebtedness (as defined in Term (8) under the part “1.


Terms of this Series of the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” of this Offering Circular) of the Issuer, from time to time outstanding, provided that the Issuer shall have no obligation to effect equal or rateable payment(s) at any time with respect to any such other Public External Indebtedness and, in particular, shall have no obligation to pay other Public External Indebtedness at the same time or as a condition of paying sums due on this Series of the Bonds and vice versa


If an Event of Default and/or an Event of Acceleration under this Series of the Bonds occurs and is continuing, all of this Series of the Bonds may by written notice addressed and delivered to Hungary by the holders of at least 25% of the aggregate principal amount of this Series of the Bonds then outstanding, be declared immediately due and payable, whereupon, unless prior to such date Hungary shall have cured or otherwise rectified the relevant event, all of this Series of the Bonds shall become immediately due and payable at their principal amount together with accrued interest


. Hungary shall ensure that it will use all reasonable endeavors to give prompt notice of any such declaration to all Bondholders. The terms of “Event of Default” and “Event of Acceleration” are defined in Term (35) under the heading “1. Terms of this Series of the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” of this Offering Circular.


The Terms of this Series of the Bonds provides that, any dispute arising out of or in connection with this Series of the Bonds shall be submitted to CIETAC for arbitration in Beijing in accordance with the CIETAC arbitration rules in effect at the time of the submission of the dispute for arbitration. The terms of this Series of the Bonds further provides that such arbitral awards will be final and binding upon the parties. The arbitral tribunal shall consist of three (3) arbitrators.


Each of the Issuer as a party and the Bondholders participating in the dispute as the other party may appoint any person, whether on the arbitrator list provided by CIETAC or not, as an arbitrator. The arbitration proceedings shall be conducted in both English and Chinese.


Pursuant to the New York Convention, which was ratified by Hungary on 5 March 1962 and by China on 22 January 1987, such an arbitral award rendered by CIETAC shall be recognized and enforced by the courts of Hungary in accordance with the rules of procedures of Hungary. The recognition and enforcement of arbitration awards in Hungary is mainly governed by:
(1) the New York Convention (implemented to the Hungarian law by Law Decree 25 of 1962);
(2) Act CXXX of 2016 on the Civil Procedure Code;


(3) the Act LX of 2017 on Arbitration; and
(4) the Enforcement Act.
In line with the Enforcement Act, any arbitral award obtained in proceedings of a foreign arbitration tribunal (such as CIETAC) shall be recognized and enforced by a Hungarian court, provided that:
(1) the arbitral award is qualified to be a condemnation in a civil law case or a civil law claim in
a criminal case or a settlement of the parties approved by the arbitration court;


(2) the enforcement of the arbitration award is allowed by law, international treaty (such as the
New York Convention, or the Agreement for mutual legal assistance in civil and commercial cases between the Republic of Hungary and the PRC signed on 9 October 1995) or reciprocity exists between Hungary and the foreign country where the arbitration tribunal resides; and
(3) the arbitral award is final and enforceable under the laws of the state where it has been adopted.


Nevertheless, in accordance with the New York Convention, the enforcement of the arbitral award will be refused by Hungarian courts if – inter alia –:
(1) such arbitral award is contrary to public policy (“ordre public”) in Hungary;
(2) the subject of the proceedings might not be adjudicated by arbitration under Hungarian law;
(3) the arbitral award was brought as a result of a proceedings in which the Hungarian court and authorities have exclusive jurisdiction;


(4) the agreement of the respective parties is invalid under its applicable law to which the parties
have subjected it, or failing any indication thereon, under the law of the state where the award was made;
(5) the party against whom the award is invoked was not given proper notice of the appointment
of the arbitrator(s) or the proceedings or was otherwise unable to participate in the proceedings and present its case;


(6) the composition of the arbitration tribunal or its proceedings was not in accordance with the
agreement of the parties, or, failing such agreement, under the law of the state where the award was made; or
(7) Hungarian courts or other authorities have already determined the matter (“res judicata”).


As of the date of this Offering Circular, the Issuer is not aware of any fact, circumstance or reason that would render the arbitral awards duly obtained in connection with this Series of the Bonds unrecognizable or unenforceable in Hungary.
In the process for recognition and enforcement of an arbitral award obtained in proceedings of a foreign arbitration tribunal (such as CIETAC), specific requirements exist as to certification in accordance with the New York Convention.


The Issuer is a foreign sovereign. The Issuer has agreed to submit to arbitration by CIETAC in Beijing for any dispute arising out of or in connection with this Series of the Bonds. The Issuer hereby irrevocably waives its right to claim sovereign immunity in any arbitration in CIETAC or in any Hungarian court to enforce any relief given or arbitral awards rendered by CIETAC. To the extent that Hungary may in any jurisdiction claim for itself or its assets or revenues immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets or revenues such immunity (whether or not claimed), Hungary agrees not to claim and irrevocably waives such immunity to the fullest extent permitted by applicable law, provided that Hungary does not waive any immunity with respect to:


(1) present or future “premises of the mission” as defined in the Vienna Convention on
Diplomatic Relations signed in 1961;
(2) “consular premises” as defined in the Vienna Convention on Consular Relations signed in 1963;
(3) any other property or assets used solely for official state purposes in Hungary or elsewhere;
(4) military property or military assets of Hungary related thereto;


(5) any non-transferable national assets and national assets with priority importance as defined in or in accordance with applicable Hungarian laws.
Thus, the Issuer may assert immunity to such actions or with respect to such property or assets. The Bondholders may have difficulties making any claims as described above or enforcing arbitral awards against such properties or assets.
SECTION 4: RISK FACTORS


The following section does not describe all of the risks and investment considerations (including those relating to each prospective investor’s particular circumstances) with respect to an investment in this Series of the Bonds. Prior to making an investment decision, each prospective investor should carefully consider the following risk factors, along with the other matters set out in this Offering Circular. All of these factors may have a material adverse effect on the Issuer.


Prior to making an investment decision with respect to this Series of the Bonds, each prospective investor should carefully consider all the information set out in this Offering Circular.
1. Risks relating to the Issuer
(1) The worldwide economic effects of the outbreak of the Coronavirus could adversely affect Hungary’s economy.


The outbreak of Coronavirus disease 2019 (“COVID-19”) is currently having an indeterminable adverse impact on the world economy. On 30 January 2020, the WHO declared COVID-19 a public health emergency of international concern and on 11March 2020, declared the outbreak a pandemic. COVID-19 has begun to have numerous worldwide effects on general commercial activity.


In Hungary, following the discovery of the first case of COVID-19 in the country, the government implemented various protective measures, including declaring a state of danger with effect from 11 March 2020, decreeing a national curfew, suspending international passenger flights and extending tax amnesty. See Section 6 “Description of the Issuer – 1. Overview of Hungary – (5) Overview of Political Situation – COVID-19 Outbreak”.


At this time, given the uncertainty of the lasting effect of COVID-19, the financial impact on Hungary’s economy cannot be determined. In the medium to long term, if the spread of COVID-19 is prolonged, it could severely adversely affect the economies and financial markets of Hungary and of many other countries, resulting in an economic downturn that could, among other effects, reduce international trade flows. The occurrence of these events could have an adverse effect on Hungary’s economy.


(2) Hungary’s economy and economic growth might be affected by eventual adverse external factors.


Hungary’s economy and macroeconomic goals – as in most countries’ case – might be susceptible to eventual adverse external factors, including the ongoing instability in the European banking system and weakness of the sovereign debt market of certain members of the European Monetary System. If global economic growth stalls and Hungary’s primary trading partners experience economic difficulties, it could result in less export by Hungary, which relies on the export market.


The European Union, particularly Germany, is Hungary’s largest export market. A decline in demand for imports from Hungary’s major trading partners, such as the European Union, from whatever source, could have a material adverse impact on Hungary’s balance of trade and adversely affect Hungary’s economic growth. The monetary policy of the European Central Bank has substantial indirect effect on the Hungarian capital market.


The possible termination of the ongoing quantitative easing programmes of the European Central Bank could set the stage for higher interest rates in the future. A tighter ECB monetary policy stance could have a material adverse impact on Hungary’s capital markets and the government’s borrowing costs, negatively impacting Hungary’s fiscal position. Hungary’s ESA-based fiscal deficit was 8.


1% of GDP in 2020, and Hungary currently has high fiscal financing requirements, partly due to the ongoing Coronavirus epidemic.
The tapering of the ongoing quantitative easing programmes of the European Central Bank could have a material adverse impact on Hungary’s capital market and adversely affect Hungary’s financial stability 1 .


1 Current discussions with the EU, including the recent report prepared by the European Parliament on the Rule of Law in Hungary are of a political nature. The eventual proceedings have no direct implications on the economic situation. Any deterioration in the relationship between Hungary and the EU Commission, or any reduction in EU funds allocated to
(3) Various factors affecting the economy of Hungary


In addition to the above, the economy of Hungary can also be adversely affected by other various factors, including, without limitation:  protracted growth slowdown in the Eurozone;  global financial market volatility;  adverse change or volatility in level of commodity prices, exchange rate, interest rate or inflation;  increase in household debt and default in retail or small-medium enterprises debt in Hungary;  social and labour instability in Hungary;  decrease in tax revenue of the government, increase in unemployment benefits or other


economic or social expenditure which will increase the deficit of the government;  increase in public spending due to aging population or decrease in population may lower the productivity of Hungary;  political instability and threat of terrorist attacks around the world;  any human created or natural disaster may impact Hungary or its major trading partners;  deterioration of the diplomatic or economic relations with other countries;


 any other factors that may have adverse impact the oil supply or global economy;  political and social unrest in certain countries;  policy changes in internal and foreign affairs; and  potential deterioration of fiscal deficit.
(4) There can be no assurance that Hungary’s credit rating will not change.


As of the date of this Offering Circular, long-term foreign currency and local currency debt of Hungary is rated BBB by Standard & Poor’s and Baa2 byMoody’s. Hungary’s foreign currency and local currency sovereign credit rating issued by Fitch Ratings is currently BBB. In addition, based on the rating report issued by the Credit Rating Agency dated 15 October 2021, this Series of the Bonds and the Issuer are assigned a rating of AAA with a stable outlook.


A credit rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency.


Rating agencies continue to assess rating levels, including to monitor the potential impact of the current coronavirus pandemic generally. There can be no assurance that the rating or outlook of Hungary will not be placed on watch or be subject to change in the future, whether due to the economic impact of the coronavirus pandemic on the macro-economic environment or otherwise.


A downgrade in rating or a negative change in outlook could have a materially adverse impact on the cost of funding of Hungary, and could have a further impact on the Hungarian economy including on the GDP and budget.
2. Risks relating to the Bonds
(1) This Series of the Bonds may not be a suitable investment for all investors seeking exposure to green assets.


It is the Issuer’s intention to apply the proceeds of this Series of the Bonds to Eligible Green Expenditure. A prospective investor should have regard to the information set out in the Section 8 “Use of Proceeds” and Section 9 “The Issuer’s Green Bond Framework and Certification”, and determine for itself the relevance of such information for the purpose of an investment in this Series
Hungary going forward, could have some adverse impact on Hungary.


of the Bonds together with any other investigation it deems necessary.
No assurance is given by the Issuer or the Lead Underwriter that such use of proceeds will satisfy any present or future investment criteria or guidelines with which an investor is required, or intends, to comply, in particular with regard to any direct or indirect environmental impact of any project or uses, the subject of or related to, the Green Bond Framework.


It should be noted that there is currently no consistent definition or market consensus of what constitutes a “green” or equivalently-labelled expenditure or project nor can any assurance be given that a clear definition or consensus will develop over time or that any adverse environmental, social and/or other impacts will not occur during the implementation of any projects or the issues the subject of, or related to, any Eligible Green Expenditure.


Accordingly, no assurance can be given that Eligible Green Expenditure will meet investor expectations or requirements regarding such “green” or similar labels.


Each prospective investor should have regard to the factors described in the Green Bond Framework, seek advice from their independent financial adviser or other professional adviser on the relevance of the information contained in this Offering Circular regarding the use of proceeds and its purchase of this Series of the Bonds and conduct any other investigations they deem necessary to reach their own conclusions before deciding to invest.


In connection with the issue of this Series of the Bonds, the Issuer has appointed (i) CICERO to issue a Second Party Opinion, confirming that the Green Bond Framework and intended use of proceeds on Eligible Green Expenditure are aligned with the Green Bond Principles; and (ii) the Third Party Certification Institution to issue a Third Party Certification Report, confirming that the intended use of proceeds on Eligible Green Expenditure are aligned with the 2021 Catalogue.


Neither the Second Party Opinion nor the Third Party Certification Report is, or shall it be deemed to be, incorporated in and/or form part of this Offering Circular. The Second Party Opinion and the Third Party Certification Report may not reflect the potential impact of all risks related to the structure, market, additional risk factors discussed above and other factors that may affect the value of this Series of the Bonds or the Eligible Green Expenditure.


The Second Party Opinion and the Third Party Certification Report do not constitute a recommendation to buy, sell or hold securities and would only be current as of the date it is released. Currently, CICERO is not subject to any specific regulatory or other regime or oversight.


Prospective investors must determine for themselves the relevance of the Second Party Opinion and/or the Third Party Certification Report and/or the information contained therein and/or the provider of the Second Party Opinion and the Third Party Certification Report for the purpose of any investment in this Series of the Bonds.


In particular, no assurance or representation is or can be given by the Issuer or the Lead Underwriter to investors that the Second Party Opinion and the Third Party Certification Report will reflect any present or future investor expectations or requirements with regard to any investment criteria or guidelines with which such investor or its investments are required to comply.


The Bondholders have no recourse against the providers of the Second Party Opinion and the Third Party Certification Report. A withdrawal of the Second Party Opinion or the Third Party Certification Report may affect the value of this Series of the Bonds and/or may have consequences for certain investors with portfolio mandates to invest in green assets.


In the event that any of this Series of the Bonds are listed or admitted to trading on a dedicated “green” or other equivalently-labelled segment of a stock exchange or securities market, no representation or assurance is given by the Issuer, the Lead Underwriter or any other person that such listing or admission satisfies any present or future investment criteria or guidelines with which such investor is required, or intends, to comply.


Furthermore, it should be noted that the criteria for any such listings or admission to trading may vary from one stock exchange or securities market to another. No representation or assurance is given or made by the Issuer, the Lead Underwriter or any other person that any such listing or admission to trading will be obtained in respect of any of this Series of the Bonds or that any such listing or admission to trading will be maintained during the life of this Series of the Bonds.


A failure of this Series of the Bonds to meet investor expectations or requirements as to their “green” or equivalent characteristics including the failure to apply proceeds to Eligible Green Expenditure,


the failure to provide, or the withdrawal of, a third party opinion, report or certification, this Series of the Bonds ceasing to be listed or admitted to trading on any dedicated stock exchange or securities market as aforesaid or the failure by the Issuer to report on the use of proceeds or Eligible Green Expenditure as anticipated, may have a material adverse effect on the value of this Series of the Bonds and/or may have adverse consequences for certain investors with portfolio mandates to invest in green assets (which consequences may include the need to sell this Series of the Bonds as a result of this Series of the Bonds not falling within the investor’s investment criteria or mandate)


.
(2) This Series of the Bonds may not be a suitable investment for all investors.
Each investor who intends to invest in any of this Series of the Bonds must determine the suitability of that investment in light of its own circumstances. In particular, such investor should:
(a) have sufficient knowledge and experience to make a meaningful evaluation on such
investment, the merits and risks of investing in this Series of the Bonds and the information contained in this Offering Circular;


(b) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of
its particular financial situation, an investment in this Series of the Bonds and the impact such investment will have on its overall investment portfolio;
(c) have sufficient financial resources and liquidity to bear all of the risks of an investment in


this Series of the Bonds, including where principal or interest is payable in one or more currencies where the currency for principal or interest payments is different from the investor’s currency;
(d) understand thoroughly the terms of this Series of the Bonds and be familiar with the behavior of any relevant financial markets; and
(e) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios


for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
(3) This Series of the Bonds are unsecured obligations.


It will be particularly important for the investor to evaluate the Issuer’s credit risk when considering an investment in this Series of the Bonds as this Series of the Bonds are unsecured. If the Issuer became unable to pay amounts owed to the investor under this Series of the Bonds, such investor does not have recourse to any other security or collateral and, in a worst case scenario, may not receive any payments under this Series of the Bonds.


(4) This Series of the Bonds will only rank pari passu with Public External Indebtedness not all indebtedness of the Issuer.
This Series of the Bonds constitute direct, unconditional and unsecured obligations of the Issuer and will rank pari passu, without preference among themselves, with all other unsecured and unsubordinated Public External Indebtedness (as defined in Term (8) under the part “1.


Terms of this Series of the Bonds” in Section 5 “Terms of this Series of the Bonds and Offering Arrangements” of this Offering Circular) of the Issuer, from time to time outstanding, provided that the Issuer shall have no obligation to effect equal or rateable payment(s) at any time with respect to any such other Public External Indebtedness and, in particular, shall have no obligation to pay other Public External Indebtedness.


(5) There may be no active trading market or secondary market liquidity for this Series of the Bonds.


This Series of the Bonds to be issued will be new securities which may not be widely distributed and for which there is no active trading market. After their initial issuance, this Series of the Bonds may trade at a discount to their initial offering price, depending upon factors including prevailing interest rates, the market for similar bonds (as applicable), general economic conditions and the financial condition of the Issuer.


Accordingly, the investor is subject to the risk that its investment in this Series of the Bonds may be difficult or impossible to trade.
A lessening of the liquidity of this Series of the Bonds may cause, in turn, an increase in the volatility associated with the price of this Series of the Bonds.


An investor in this Series of the Bonds is subject to the risk, that to the extent there is no liquid market in this Series of the Bonds, an investor may have to wait until the maturity thereof in order to realize the value of its investment and, as such, an investor should proceed on the assumption that they may have to bear the economic risk of an investment in this Series of the Bonds until their maturity.
(6) Certain factors may affect the value and trading price of this Series of the Bonds.


The value of this Series of the Bonds prior to maturity is expected to depend on a number of factors:
(a) the trading price of this Series of the Bonds;
(b) the time remaining to maturity;
(c) any change(s) in interim interest rates and investment return rates; and
(d) any change(s) in currency exchange rates.


As a result of these factors the price at which a Bondholder will be able to sell this Series of the Bonds prior to maturity may be less than the initial amount invested in this Series of the Bonds. Each of these factors interrelates in complex ways (for example, one factor may offset an increase in the trading value of this Series of the Bonds caused by another factor).


Investors are subject to the risk that the value of this Series of the Bonds may be adversely affected by one or more of the above factors.
(7) General economic conditions may affect this Series of the Bonds.


The market for debt securities is influenced by economic and market conditions, interest rates, currency exchange rates and inflation rates in Asia and other regions and countries. There can be no assurance that events occurring in Asia and other regions and countries will not cause market volatility, that such volatility will not adversely affect the price of this Series of the Bonds, and that economic and market conditions will not have any other adverse effect.


(8) Change of law may have an adverse effect on this Series of the Bonds.


The terms of this Series of the Bonds are based on PRC laws and Hungarian laws in effect as at the date of this Offering Circular. There is a risk that the interpretation and/or effect of the terms of this Series of the Bonds may be subject to change in such a manner as to adversely affect the contractual rights of holders of this Series of the Bonds. The value of this Series of the Bonds may also be affected by changes in laws.


No assurance can be given as to the impact of any possible judicial decision or change to PRC law or Hungarian laws or change in administrative practices after the date of this Offering Circular.
(9) The investors will only be able to trade this Series of the Bonds through the clearing system of the Custody Institution designated by PBOC and be subject to any risks relating to the clearing system.


The investors will only be able to trade this Series of the Bonds only through the clearing system of the Custody Institution designated by PBOC and will have to rely on their procedures for transfer, payment and communication with the Issuer to receive payment under this Series of the Bonds.
The Issuer has no responsibility or liability for the relevant records relating to, or payment procedure in respect of, this Series of the Bonds.


(10)Resolutions passed on Bondholder meetings may not be in the best interest of all Bondholders.
Term (36) of this Series of the Bonds and Part “3. Meetings of Bondholders” in Section 16 “Investor Protection Mechanism” of this Offering Circular sets forth the provisions for calling meeting of the Bondholders to consider matters affecting their interests. These provisions include


the adoption of extraordinary resolutions approving amendments to these provisions or other arrangements. Any resolutions officially passed in such meetings in accordance therewith bind Bondholders, including the Bondholders who did not attend or vote at the relevant meeting and the Bondholders who voted to the contrary, so the Bondholders are subject to the risk that resolutions not for their benefit may be adopted.
(11)The Terms of this Series of the Bonds contain CACs.


The Terms of this Series of the Bonds include certain provisions relating to the amendments, modifications and waivers to certain terms of this Series of the Bonds, which are commonly referred to as Collective Action Clauses (“CACs”). Such provisions allow the decisions made by a majority of the Bondholders to bind all the Bondholders, including those who did not vote and who voted against such decisions.


Such provisions also permit that, with respect to Reserved Matters (as defined herein), Debt Securities Capable of Aggregation (as defined herein, including, but not limited to, this Series of the Bonds and other Bonds to be issued under the Programme) issued by the Issuer in multiple series be taken in aggregate in voting, provided that the terms of all these series of debt securities also contain the CACs.


The Issuer intends to include the above-referenced CACs in the terms of all series of the Bonds to allow the Issuer to make modifications or take other actions with respect to any Reserved Matters of this Series of the Bonds. This means that the resolutions passed by a supermajority of holders (counted in aggregate for all series of the Bonds, where applicable, and/or counted for a particular series of the Bonds) may bind all the bondholders holding the respective series of the Bonds.


(12)The Terms of this Series of the Bonds restrict specific Bondholders to declare the occurrence of an Event of Default and/or an Event of Acceleration, and allow a majority of holders to rescind the relevant declaration.


If an Event of Default and/or an Event of Acceleration under this Series of the Bonds occurs and is continuing, all of this Series of the Bonds may by written notice addressed and delivered to Hungary by the holders of at least 25% of the aggregate principal amount of this Series of the Bonds outstanding, be declared immediately due and payable.


Then, all outstanding principal amount of and interest on this Series of the Bonds outstanding shall be paid immediately without further actions or measures by the holders.


If the Issuer or the Post-issuance Manager receives a notice in writing from holders of at least 50% in aggregate principal amount of this Series of the Bonds then outstanding and/or a resolution is passed at a meeting of the Bondholders to the effect that the Event(s) of Default and/or Event(s) of Acceleration giving rise to a declaration of acceleration made pursuant to Term (35)(a) or (35)(b) is or are cured or is or are waived by them following any such declaration and that such holders approves the rescission of the relevant declaration, the Issuer shall give notice to the Bondholders of the rescission of the relevant declaration whereupon it shall be rescinded and shall have no further effect


. The responsibilities of the Post-issuance Manager with respect to such meeting and disclosure of information are set forth in paragraphs (5) and (6) under the heading “1. Post-issuance Manager and Related Responsibilities” in Section 16 “Investor Protection Mechanism” of this Offering Circular.
(13)Interest rate risk.


Investors in this Series of the Bonds are exposed to the risk that subsequent changes in interest rates may adversely affect the value of the fixed rate bonds. In the case that the interest rates in the market increases beyond the fixed interest rates of this Series of the Bonds, the investors will not be able to obtain such benefits.


Investments in this Series of the Bonds may involve interest rate risk with respect to the currency of denomination of this Series of the Bonds. A variety of factors influences interest rates such as macroeconomic, governmental, speculative and market sentiment factors. Such fluctuations may have an impact on the value of this Series of the Bonds.
(14)Exchange rate risk.


The value of Renminbi has been fluctuating against Euro, US dollars and other major currencies and affected by PRC and international political or economic conditions and other factors. If investors evaluate their investment returns in a currency other than Renminbi (“Investor Currency”), there will be certain exchange rate risks associated with the investment in this Series of the Bonds, including significant fluctuations in exchange rates between Renminbi and the Investor Currency.


The depreciation of Renminbi against the Investor Currency may result in a decline in the actual yield on investment in this Series of the Bonds lower than the coupon rates on this Series of the Bonds as well as exchange losses from converting the interest income and gains from this Series of the Bonds into the Investor Currency. As a result, investors may receive less than, or in some circumstances, substantially less than their expected return on principal or interest.


(15)Legal investment considerations may restrict certain investments.
The investment activities of certain investors are subject to laws and regulations relating to legal investment, or review or regulation by certain authorities.


Each potential investor should consult its legal advisers to determine whether and to what extent (i) this Series of the Bonds are legal investments for it, (ii) this Series of the Bonds can be used as collateral for various types of borrowing and (iii) other restrictions apply to its purchase or pledge of any of this Series of the Bonds.


Investors should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of this Series of the Bonds under any applicable risk-based capital or similar rules.
(16)Taxation in relation to this Series of the Bonds.


Transactions involving this Series of the Bonds may have tax consequences for potential purchasers which may depend, amongst other things, upon the status of the potential purchaser and laws relating to transfer and registration taxes, stamp duty, stamp duty reserve tax and/or similar transfer taxes (for details, please refer to Section 11 “Taxation Relating to this Series of the Bonds” of this Offering Circular) may be payable on any transfer or agreement to transfer assets in cases where obligations of the Issuer under this Series of the Bonds are physically settled


.
3. Risks relating to Cross-border Offering
(1) The Issuer’s ability to source Renminbi outside the PRC and to remit Renminbi into the PRC to service this Series of the Bonds may be limited.


Renminbi is not freely convertible and there are significant restrictions on the remittance of Renminbi into or out of the PRC. Regulations in the PRC on the remittance of Renminbi into the PRC for settlement of capital account items are developing gradually. As a result of the restrictions imposed by the PRC government on cross-border Renminbi fund flows, the availability of Renminbi outside the PRC is limited, and the size of Renminbi-denominated financial assets outside the PRC is limited.


Although it is expected that the offshore Renminbi market will continue to grow in depth and size, its growth is subject to many constraints as a result of PRC laws and regulations on foreign exchange.


There is no assurance that the PRC government will continue to liberalize control over cross-border remittance of Renminbi in the future or that new regulations in the PRC will not be promulgated in the future which have the effect of restricting or prohibiting the remittance of Renminbi into or outside the PRC. Neither is there any assurance that new regulations will not be promulgated by the PRC government which will have the effect of restricting the availability of Renminbi outside the PRC.


The above factors, including the restrictions on the convertibility and remittance of Renminbi and the limited availability of Renminbi outside the PRC, may adversely affect the liquidity of this Series of the Bonds and the Issuer’s ability to service this Series of the Bonds by obtaining offshore Renminbi.
(2) The location of arbitration and the enforcement of the arbitral awards may be different, and there may be difficulties in enforcing the arbitral awards.


If there is an Event of Default and/or an Event of Acceleration under this Series of the Bonds, in accordance with the Terms of this Series of the Bonds, all of this Series of the Bonds may by written notice addressed and delivered to Hungary by the holders of at least 25% of the aggregate


principal amount of this Series of the Bonds then outstanding, be declared immediately due and payable. Term (34) provides that, any dispute arising from or in connection with this Series of the Bonds shall be submitted to CIETAC for arbitration to be conducted in accordance with the CIETAC arbitration rules in effect at the time of the submission for arbitration. Term (34) further provide that such arbitral awards shall be final and binding upon both parties.


The arbitral tribunal shall consist of three (3) arbitrators. Each of the Issuer as a party and the Bondholders participating in the dispute as the other party may appoint any person, whether on the arbitrator list provided by CIETAC or not, as an arbitrator. The arbitration proceedings shall be conducted in both English and Chinese.


Pursuant to the New York Convention, which had been ratified by Hungary on 5 March 1962 and by China on 22 January 1987, such an arbitral award shall be recognized and enforced by the courts of Hungary in accordance with the rules of procedures of Hungary, except in the circumstances where:
(a) the party relying on such arbitral award or applying for its enforcement does not comply with the requirements set forth in the Enforcement Act; or


(b) such recognition or enforcement may be refused by Hungarian courts on the grounds
provided in the New York Convention or the applicable Hungarian laws.


Those requirements and grounds for refusing recognition or enforcement are set forth in Section 3 “Status of this Series of the Bonds and Legal Proceedings”. In addition, the recognition and enforcement of a foreign arbitral award against the Issuer are subject to other various qualifications set forth in Section 3 “Status of this Series of the Bonds and Legal Proceedings”.


Therefore, there is no assurance that the arbitral award rendered by CIETAC against the Issuer can be successfully enforced in the courts in Hungary.
(3) The Issuer may claim sovereign immunity to legal proceedings with respect to its certain property or assets.
In Term (34), the Issuer waives its right to claim sovereign immunity in any arbitration in CIETAC or in any Hungarian court to enforce any relief given or arbitral awards rendered by CIETAC.


To the extent that Hungary may in any jurisdiction claim for itself or its assets or revenues immunity from arbitration, suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets or revenues such immunity (whether or not claimed), Hungary has agreed not to claim and irrevocably waives such immunity to the fullest extent permitted by applicable law.


However, it is only a specific and limited waiver of sovereign immunity in relation to this Series of the Bonds and under no circumstances shall it be interpreted as a general waiver by the Issuer or a waiver with respect to proceedings unrelated to this Series of the Bonds. Further, the Issuer will not agree to waive its right to immunity regarding with respect to:
(a) present or future “premises of the mission” as defined in the Vienna Convention on
Diplomatic Relations signed in 1961;


(b) “consular premises” as defined in the Vienna Convention on Consular Relations signed in 1963;
(c) any other property or assets used solely for official state purposes in Hungary or elsewhere;
(d) military property or military assets of Hungary related thereto;
(e) any non-transferable national assets and national assets with priority importance as defined in or in accordance with applicable Hungarian laws.


Thus, the Issuer may assert immunity to such actions or with respect to such property or assets. The Bondholders may have difficulties making any claims as described above or enforcing arbitral awards against such properties or assets.
SECTION 5: TERMS OF THIS SERIES OF THE BONDS AND OFFERING ARRANGEMENTS
1. Terms of this Series of the Bonds
(1) Name of this Series of the Bonds
Hungary 2021 Series 1 RMB Green Bonds (Bond Connect).
(2) Issuer
Hungary.
(3) Notice of Acceptance of Registration Number


NAFMII Registration No. [2021] RB1.
(4) Registered Amount of the Programme
RMB3 billion.
(5) Amount of this Series of the Bonds to be Issued
RMB1 billion.
(6) Status of this Series of the Bonds


This Series of the Bonds constitute direct, unconditional and unsecured obligations of the Issuer and rank and will rank pari passu, without preference among themselves, with all other unsecured and unsubordinated Public External Indebtedness (as defined in Term (8) below) of the Issuer, from time to time outstanding, provided that the Issuer shall have no obligation to effect equal or rateable payment(s) at any time with respect to any such other Public External Indebtedness and, in particular, shall have no obligation to pay other Public External Indebtedness at the same time or as a condition of paying sums due on this Series of the Bonds and vice versa


.
(7) Unsecured
This Series of the Bonds are not secured.
(8) Negative Pledge and Covenants
So long as any of this Series of the Bonds remains outstanding, Hungary undertakes that, if it or the National Bank of Hungary creates or permits to subsist any Security Interest upon the whole or any part of its or their assets or revenues, present or future, to secure: (i) any Public External Indebtedness of Hungary having an original maturity of at least one year;


or (ii) any Public External Indebtedness of the National Bank of Hungary having an original maturity of at least one year and incurred on or prior to 31 December 1998, Hungary shall, at the time or prior thereto, secure equally and ratably therewith the obligations of Hungary under this Series of the Bonds.


So long as any of this Series of the Bonds remains outstanding, Hungary shall: (i) continue to procure that either Hungary or the National Bank of Hungary exercises full ownership, power and control over the International Monetary Assets as they exist from time to time;


and (ii) duly obtain and maintain in full force and effect all governmental consents, licenses, approvals and authorizations, and/or make or cause to be made all (if any) registrations, recordings and filings, which may at any time be required to be obtained and/or made in Hungary for the execution, delivery or performance of all obligations arising under this Series of the Bonds and the validity or enforceability thereof.
In this Term:


“External Indebtedness” means any obligation in respect of existing or future Indebtedness denominated or payable, or at the option of the holder thereof payable, in a currency other than the lawful currency of Hungary provided that, if at any time the lawful currency of Hungary is the Euro, then any Indebtedness as described herein, expressed in or payable or optionally payable in Euro, more than 50% of the aggregate principal amount of which is initially placed outside


Hungary and issued after the date on which the Euro becomes the lawful currency of Hungary,
shall be included;
“IMF” means the International Monetary Fund;
“Indebtedness” means any indebtedness of any Person (whether incurred as principal or surety) for money borrowed;


“International Monetary Assets” means all of Hungary’s official holdings of gold and all of Hungary’s and Hungary’s Monetary Authorities’ holdings of: (i) Special Drawing Rights; (ii) Reserve Positions in the IMF; and (iii) Foreign Exchange;


the terms “Special Drawing Rights”, “Reserve Positions in the Fund” and “Foreign Exchange” have, as to the types of assets included, the meanings given to them in the IMF’s publication entitled “International Financial Statistics” or such other meaning as shall be formally adopted by the IMF from time to time;


“Monetary Authorities” means the National Bank of Hungary and, if and to the extent that it performs the functions of a monetary authority for or on behalf of Hungary or the government thereof, any currency board, exchange stabilization fund or treasury;
“National Bank of Hungary” means Magyar Nemzeti Bank, the central bank of Hungary or any other entity which, from time to time, acts as a central bank of Hungary, as the case may be;


“Person” means any individual, company, corporation, firm, partnership, joint venture, association, organization, state or agency of a state or other entity, whether or not having separate legal personality;


“Public External Indebtedness” means External Indebtedness which: (i) is in the form of, or represented by, bonds, notes or other similar securities; and (ii) is, or may be, quoted, listed or ordinarily purchased and sold on any stock exchange, automated trading system or over-the-counter or other securities market; and


“Security Interest” means any lien, pledge, hypothecation, mortgage, security interest, charge or any other encumbrance, agreement or arrangement which has a similar legal and economic effect including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction.
(9) Form of this Series of the Bonds
This Series of the Bonds will be issued in real name book-entry form, to be centrally held in custody by the Custody Institution designated by PBOC.


(10)Tenor of this Series of the Bonds
The tenor of this Series of the Bonds will be three (3) years.
(11)Use of Proceeds


The net proceeds from the offering of this Series of the Bonds will be remitted offshore and converted into Euro to be consolidated into the Issuer’s green funding and will be used for Eligible Green Expenditures under Hungary’s Green Bond Framework, intended to finance or refinance expenditures within Hungary’s central government budget contributing the transition to a low carbon, climate-resilient and environmentally sustainable economy.
(12)Denomination


This Series of the Bonds will be issued in denominations of RMB100, i.e. with each accounting entry for a Bond being RMB100.
(13)Issue Price
This Series of the Bonds will be issued at par.
(14)Minimum Subscription Amount
The minimum amount to be subscribed by an investor shall be RMB10,000,000 and integral
multiples of RMB10,000,000 in excess thereof.
(15)Interest Basis
Interest shall be fixed, based on an annual rate and calculated at simple interest, without any compounding.


If the interest on this Series of the Bonds is required to be calculated for any period less than a year, it will be calculated on the basis of the actual number of days in that period in respect of which payment is being made divided by 365 days or, in a leap year, 366 days.
(16)Interest Rate


The rate of interest on this Series of the Bonds shall be fixed. The final rate of interest shall be disclosed in an announcement made in accordance with the applicable rules and be determined by the Issuer and the Lead Underwriter after the centralized Bookbuilding in respect of this Series of the Bonds. The rate of interest shall not change during the life of this Series of the Bonds.
(17)Bookbuilding Date for this Series of the Bonds
14 December 2021.


(18)Settlement Date for this Series of the Bonds
16 December 2021.
(19)First Trade Date for this Series of the Bonds
17 December 2021.
(20)Interest Payment Period for this Series of the Bonds
From 16 December 2021 to 15 December 2024.
(21)Interest Payment Dates for this Series of the Bonds


Each Interest Payment Date is 16 December of each year during the Interest Payment Period. The first Interest Payment Date shall be 16 December 2022 and the last Interest Payment Date shall be 16 December 2024. If an Interest Payment Date falls on a day that is not a Business Day, it will be postponed to the next Business Day. Additional interest will not be paid as a result of such delay in payment.
(22)Maturity Date for this Series of the Bonds


The Maturity Date is 16 December 2024. If the Maturity Date falls on a day that is not a Business Day, it will be postponed to the next Business Day. Additional interest will not be paid on the principal of this Series of the Bonds as a result of such delay in payment.
(23)Method of Payment of Principal and Interest


Interest on this Series of the Bonds shall be paid on the Interest Payment Dates. The principal of this Series of the Bonds shall be paid in one lump sum on the Maturity Date. The interest and principal payable in respect of this Series of the Bonds shall be made in accordance with the rules of the Custody Institution designated by PBOC, and shall be completed by the Custody Institution designated by PBOC.


If any Interest Payment Date or the Maturity Date is not a Business Day, the Bondholders will not be paid such interest or principal until the next following Business Day nor any interest or other sum in respect of such postponed payment.


The Issuer shall, for so long as this Series of the Bonds are outstanding, at least five (5) Business Days prior to any Interest Payment Date or the Maturity Date (as the case may be), publish, or procure the publication of, an “Interest Payment Announcement” or “Redemption at Maturity Announcement” through the Designated Disclosure Methods.


The payment of interest and principal of this Series of the Bonds shall be made in accordance with the rules of the Custody Institution, and shall be completed by the Custody Institution. Any payment made by or on behalf of the Issuer to the Custody Institution or its agent


pursuant to the relevant agreement between the Issuer and the Custody Institution for the account of a person in whose name any of this Series of the Bonds is, at the time such payment is made, registered in the register held by the Custody Institution, constitutes for all purposes an absolute and unconditional release and discharge of the Issuer, to the extent of such payment, of all obligations and indebtedness in respect of this Series of the Bonds in relation to which such payment was made.


(24)Offering Method
This Series of the Bonds will be offered by way of a public offering through centralized Bookbuilding and placement at BFAE.
(25)Target Investors
Any institutional investor in the Interbank Market other than those restricted by the laws or regulations.


Offshore investors participating in the subscription of this Series of the Bonds through the “Bond Connect” regime should, in connection with the registration, custody, clearing, settlement of this Series of the Bonds and remittance and conversion of funds, comply with applicable laws and regulations, including the Interim Measures for the Connection and Cooperation between the Mainland and the Hong Kong Bond Market published by PBOC, as well as rules of other relevant parties and service providers


.
(26)No Early Redemption
The Issuer may not redeem this Series of the Bonds prior to the Maturity Date.
(27)No Put Right
Investors do not have the right to sell this Series of the Bonds back to the Issuer.
(28)Credit Rating
This Series of the Bonds are assigned a credit rating of AAA by the Credit Rating Agency.
(29)Trading


After the completion of the issuance of this Series of the Bonds and confirmation of the rights and obligations relating to this Series of the Bonds, and upon the completion of registration with the Custody Institution designated by PBOC, this Series of the Bonds can be traded on the Interbank Market in accordance with its rules.
(30)Taxation Considerations