* Sells $468 mln; average yield rises to 2.572 pct
* Finmin retains 1 bln crowns on its books
* Bond yield attractive for domestic accounts
* Higher issuance to weigh in coming months
(Updates after top-up round)
PRAGUE, June 9 (Reuters) - The Czech Finance Ministry sold
almost double the amount it had planned in a 3-year bond auction
on Wednesday, though growing issuance to meet record borrowing
needs in 2010 drove yields higher.
The ministry sold 8.82 billion crowns ($468 million) worth
of 2.80 percent coupon government bonds due in 2013
<CZ1002729=>, above the 5 billion it had planned to offer.
Investors bid 14.72 billion crowns, while the yield on the
paper rose to 2.572 percent versus 2.41 percent at an April 7
auction. [] <CNB08>
The ministry retained 1 billion on its books in a
non-competitive top-up round after selling double the amount
offered in the first, competitive round. []
"The price was in line (with secondary markets). The only
surprise was the ministry sold double the amount (in the
competitive round)," a fixed income dealer said.
"This yield is not so bad for investors who hold it until
maturity, so it could be interesting for domestic banks. I
didn't see any foreign investors."
The yield significantly undercut the 3.597 percent investors
demanded on Wednesday in a sale of 701 million euros of
three-year bonds by Portugal -- part of the euro zone periphery
that is under close investor scrutiny over debt servicing.
That yield rose from 1.715 percent at the previous
corresponding auction held two months ago. []
HEAVY BORROWING
Analysts expect that in the first half of the year, the
Czech Republic will have raised less than a third of its
expected 280 billion crowns in gross borrowing for 2010, leaving
heavy borrowing in the latter half that is likely drive up
yields.
The ministry announced last week third quarter issuance of
52 billion crowns in bonds -- coming during the normally slow
summer months and up from an expected 32 billion this quarter.
Czech bond yields dipped this month after austerity-minded,
centre-right parties won a clear majority in an election. But
worries over Hungary's finances drove them back up.
"There is still the question that quite a bit of issuance is
coming to market in the summer and near the end of the year,"
another dealer said. "So a lot of people are still cautious."
The yield on the benchmark 2019 bond <CZ1002471=> has risen
around 9 basis points this month. The 3-year yield is up around
25 basis points, and was quoted at 2.639/479 percent after the
auction, up around 8 basis points from opening levels.
The spread over the 3-year German benchmark <DE3YT=RR>
<DE1135218=TWEB> has doubled to 200 basis points since May 1 as
safe-haven flows into German bonds have accelerated.
($1=18.83 Czech Crown)
(Reporting by Jason Hovet; Editing by Toby Chopra, John
Stonestreet)
