UPDATE 1-Demand strong at Czech 3-yr bond sale, yields fall

                                
 * Czechs sell all CZK 5.95 bln in 3-year bonds
                                
 * Demand three times offer, coupon 2.8 percent
                                
 * Bonds go for single price, single buyer likely
                                
 * Yield drops 1.993 from Aug. 4 tender
                                
 
                                
 By Jana Mlcochova
                                
 PRAGUE, Sept 8 (Reuters) - The Czech Finance Ministry sold
5.95 billion crowns ($306.7 million) in three-year bonds on
Wednesday, paying lower yields on strong demand after wrapping
up its 2010 borrowing needs this week.
                                
 In the first competitive round of the auction, the ministry
sold the 2013 <CZ1002729=>, 2.80 percent coupon bonds at a yield
of 1.993 percent, 32 basis points lower than a similar auction a
month earlier.
                                
 Demand grew to 20.11 billion crowns, from 17.9 billion
crowns in the Aug. 4 tender, or three times Wednesday's offer.
                                
 The ministry placed the entire amount planned at a single
price, prompting dealers to say only one buyer most likely took
the entire issue.
                                
 "Since the auction was taken up for a single price, it looks
like it was a single investor," said Robert Weiner, a fixed
income dealer at UniCredit bank. Other fixed income dealers said
it was probably a foreign bank that bought up the debt.
                                
 A further 1.05 billion crowns will be offered in a second,
non-competitive round later in the day.
                                
 Market watchers said falling supply, particularly after the
Czechs priced 2 billion euros in 10-year Eurobonds on Monday in
an issue the ministry said had closed out its borrowing needs
for 2010, would put further downward pressure on auction yields.
                                
 "The offer pressure on bonds is receding as the ministry has
more or less covered all its needs, said Dalimil Vyskovsky, an
interest rates dealer at Komercni Banka.
                                
 "The outlook for next year's financing needs are rather
positive, and the credit spreads of Czech bonds is still
providing room for a drop in yields." 
                                
 The 10-year Eurobond priced at 105 basis points above mid
swaps, the lowest price among non euro-zone countries and better
than some more risky members off the currency bloc.
                                
 The demand hit 5.3 billion euros, enabling the ministry to
cut the pricing guidance twice during the sale.
                                
(Reporting by Jana Mlcochova; Editing by Ron Askew)