* Czech Finmin plans 90 bln crowns in issues by year-end
* Offering 43 bln crowns in May and June
(Adds ministry comments)
By Jason Hovet
PRAGUE, May 4 (Reuters) - The Czech Republic unveiled plans
to issue 90 billion crowns ($4.47 billion) in domestic bonds
over the rest of the year, showing no signs of easing local
borrowing despite a return to foreign currency debt markets in
April.
Investors have opened a window for central Europe's
hard-pressed governments to boost borrowing as appetite for
riskier emerging markets grows on the heels of western pledges
to make funds available for victims of the global downturn.
The Czechs have already borrowed 90 billion crowns on
domestic markets this year, and plan to raise a similar amount
by the end of the year, Finance Ministry spokesman Jakub Haas
said in an emailed response to Reuters questions on Monday.
Half of that could come by the summer, with plans for six
auctions offering 43 billion crowns worth of state papers in May
and June. []
The government has raised its borrowing, but at higher
yields, as the outlook for the state budget deteriorates due to
a slump in revenue from an economy seen contracting 2.3 percent
this year.
The ministry expects the overall public sector fiscal gap to
triple this year to 4.5 percent of gross domestic product.
Officials have estimated the central state budget gap, the
lion's share of the fiscal budget, would widen to 150 billion
crowns this year. That compares to a 38.1 billion crown gap
approved by lawmakers last year.
Data on Monday showed the deficit hit 55.7 billion by the
end of April. []
LESS PRESSURE?
Central European governments have faced rising debt costs
and paralysed bond markets since the credit crunch hit home last
year but there have been more optimistic signs on investor
appetite and prices in recent weeks.
The Czech 3.55 percent coupon bond due 2012 <CZ4YT=RR>,
which will be auctioned on Wednesday, was quoted at 4.179/3.545
percent on Monday, 109 basis points over swaps, down from a
February high of 166 basis points.
The Czechs covered another good chunk of borrowing last week
by selling 1.5 billion euros in a 5-year euro-denominated bond
last week, pricing it at 190 basis points over swaps, up from 25
basis points for a 10-year bond sold in June 2008.
The ministry said in a December report that it would issue
up to 132.6 billion in domestic and international bonds in 2009,
but analysts say that could widen to up to 250 billion.
"Issuance will be heavy even after these calendars for May
and June," CSOB analyst Jan Cermak said. "The autumn will be
quite challenging."
Ministry officials have said there are no plans for another
foreign bond issue at the moment, but dealers said the eurobond
has already taken some pressure off domestic bonds and that the
ministry has built up a financing cushion in recent months.
Komercni Banka dealer Dalimil Vyskovsky noted financing
needs could already be all but covered for this year if budget
forecasts of 150 billion crowns prove to be true or at least
close the final figure.
"My opinion is that they will abstain from issuing in July
and August as was the case in the last two years, and then you
have a maximum 15 billion (crowns in issuance) for each month
until the end of the year, should the deficit really be below
200 billion," he said.
(Additonal reporting by Jan Lopatka, editing by Patrick Graham)
