Czechs sell less than planned in 15-yr bond auction

                                
 PRAGUE, Dec 2 (Reuters) - The Czech finance ministry sold
less than it had offered in a 15-year government bond auction on
Wednesday, cutting back its final planned sale of the year after
nearing its borrowing target.
                                
 The ministry sold 3.03 billion czech crowns of the 5.7
percent coupon bond due in 2024 <CZ1002547=>, less than half the
amount it had last sold in an October auction. The average yield
dropped on Wednesday to 4.779 percent from 5.276 percent.
                                
 Demand reached 7.9 billion crowns, above the offer of 5.1
billion in the first, competitive round of bidding.
                                
 "The major news was (the amount) sold. This was surprising
for the market," a fixed income trader said. "It looks like they
are quite okay with the financing for this year."
                                
 The auction was the only planned December debt sale after
the ministry last week cancelled a treasury bill tender, leaving
investors to bid up prices on the secondary market while looking
ahead to next year's supply.
                                
 The yield on the 15-year bond dropped to quote at 4.773
percent after the auction from around 4.9 percent.
                                
 "(Today's lower amount sold) was the third cut in a row now.
Demand and prices at auctions have been in line with market
conditions," another dealer said.
                                
 The country has doubled its original plans with some 260
billion crowns in bond issuance in 2009 to help tackle a
spiralling budget deficit, and expects to issue another 280
billion in bonds next year.
                                
 The ministry is due to release its 2010 financing strategy
along with the first quarter issuance calendar on Thursday.
                                
 Dealers said close attention will be paid to foreign
issuance plans after the ministry used a Swiss franc bond
issuance and euro-denominated bonds to limit issuance in local
currency in the latter half of the year.
                                
 The Czech economy, highly dependent on exports, has slowly
pulled itself out of recession this year on rebounding foreign
demand, although company orders are well below previous boom
years and unemployment is seen rising into next year, raising
government spending.
                                
 The government expects its budget deficit to reach around
6.5 percent of economic output this year, before dropping next
year to 5.3 percent as the economy recovers.
 * For a TABLE with Wednesday's auction click on [ID:nPRA004871]
(Reporting by Jason Hovet; Editing by Toby Chopra)
 ((prague.newsroom@thomsonreuters.com; Reuters Messaging:
jason.hovet.reuters.com@reuters.net; +420-224 190 476))