(Repeats story published late on Wednesday)
* Sells 3.5 bln crowns to investors, demand 13.7 bln
* Ministry cuts issue due to yield rise
By Jason Hovet
PRAGUE, Feb 10 (Reuters) - Demand jumped at a Czech 15-year
bond auction on Wednesday after market concerns over the Greek
debt crisis eased, but the bids came low, prompting the Finance
Ministry to cut the supply in half.
The cutoff surprised the market and showed the ministry was
not willing to sell at any cost, and may instead look to borrow
abroad instead of the long-end of the domestic market.
Bond yields on the secondary market rose after the results.
Market worries over rising budgets and debt in shakier euro
zone states like Greece have hit central European bonds and
other assets in the past week. Analysts do not see that pressure
letting up until a concrete solution is reached. []
The Finance Ministry sold 3.5 billion crowns ($185.2
million) worth of 5.70 percent coupon government bonds due in
2024 <CZ1002547=>, well short of the 6 billion crowns on offer.
Demand reached strong 13.7 billion crowns. The average
yield, however, rose 38 basis points from December to 5.158
percent, and the ministry cut the maximum yield at 5.183.
The bond's yield was quoted on secondary markets at
5.144/000 percent before the auction, according to Reuters data,
before slipping to 5.207/062 percent.
The ministry, which rarely comments on its local debt sales,
said later it had decided to cut the auction by half after a 15
basis point rise in the bond yield.
"Among others, it is because the Finance Ministry compares
the yield on the domestic bonds with a possible foreign
financing," the ministry statement said.
NEXT MOVE
A Prague-based fixed income trader said the ministry's
statement could hint at a foreign-currency bond issue.
"Comparing where the other Czech euro issues trade, it could
be that it would be cheaper to finance in other currencies than
crowns," the trader said.
The Czech debt strategy leaves room to cover half of an
expected 280 billion crowns in borrowing on foreign markets this
year. It covered a fifth of last year's borrowing this way.
Finance Minister Eduard Janota said last week the country
may issue 1-2 billion euros worth of foreign bonds in 2010,
below the limit but level with last year. []
Analysts said the Czech Republic and others in ex-communist
central Europe look in better shape than the euro zone's weaker
states, but that does not exempt them from the broader impact of
worries over Greece and others on investors' appetite for risk.
The Czechs, as neighbouring Poland, are expected to tap
foreign debt markets to ease the load on domestic bonds this
year, as budget deficits rise on the back of the financial
crisis and efforts to prod the economy back to growth.
The yield on the 15-year bond has jumped about 50 basis
points since Jan 1 with a wider correction after an end-2009
rally due to lower issuance following heavier borrowing earlier.
But while Greece's spreads against 10-year German Bunds have
jumped as much as 150 basis points since the start of the year,
the Czech spread widened no more than 70 basis points.
* For a TABLE with Wednesday's auction click []
(Reporting by Jason Hovet; editing by Patrick Graham)
