* Slovaks eye new benchmark bonds issue in April
* Prefer 10-yr rather than 15-yr, start as syndicated
* Debt agency head says in comfortable refinancing position
By Martin Santa
BRATISLAVA, March 4 (Reuters) - Slovakia will open new 10-
or 15-year benchmark bonds in April as syndicated paper
registered on the local market, a first step in reforms designed
to attract new investors and boost liquidity, the head of the
national debt agency told Reuters.
The 63 billion euro economy plans to merge its domestic and
foreign bond markets to help diversify its portfolio of
investors, focus on benchmark bonds and boost secondary market
trading
Lack of liquidity in a small capital market, competition
from covered bonds and market turbulence gave Slovaks, who
adopted the euro in January 2009, a hard time last year.
Slovakia has enjoyed a decline in debt costs since, Daniel
Bytcanek, the head of the ARDAL agency, said in an interview.
In order to improve market efficiency, the agency will start
merging the foreign and domestic markets, ending a legacy of
pre-euro years when it borrowed in euros abroad and in domestic
currency locally.
All new bonds will be registered locally, ending a practice
of issues on the Eurobond market.
"Our primary goal is to widen the market and boost
liquidity," Bytcanek said.
"From now on we are considering benchmark bond issues worth
3 billion euros: part of the issue would be offered to investors
abroad, but it would be registered here in Slovakia -- part of
it would be placed abroad, part of it home," he added.
Bytcanek said the agency would stick to its 2010 gross
borrowing plan of 6-8 billion euro in bonds and T-bills.
He said he saw the country's re-financing position as
comfortable, and aimed to auction most of the planned volume in
the first half of the year.
He said he was happy with current market yields.
"Financing between 4-4.5 percent (yields) on 10- and 15-year
maturities, is what Slovakia deserves," Bytcanek said.
Slovakia is rated A1 by Moody's Investors Service and A+ by
both Standard & Poor's and Fitch Ratings.
The government of Prime Minister Robert Fico pledged to axe
the fiscal deficit to 5.5 percent of gross domestic product
(GDP) this year, despite heading for a June general election,
and to cut it to the EU's official 3 percent limit in 2012.
NEW BENCHMARK BONDS, START AS SYNDICATED
The first issue under the new system in April will likely
have a 10-year maturity, though a 15-year tenor is also under
consideration, and up to one half will be sold in the
syndication. The rest will be offered later in regular auctions.
"We will place a new benchmark bond this April, to start it
as a syndicated bond, sell up to 1.5 billion euros ... based on
market conditions," Bytcanek said.
Launching the bond through syndication would enable ARDAL to
attract a wider range of investors, while hoarding enough
liquidity to stimulate trading on the secondary market before
auctioning more of the paper locally.
The heavily export-dependent economy has sold 1.197 billion
euros worth of treasury bills and 1.017 billion euros worth of
government bonds so far this year.
The premium investors demand to hold Slovak 10-year
fixed-rate bonds rather than euro zone benchmark German Bunds
stood at 110.8 basis points (bps) on Thursday, compared with
Portugal's 117.9 bps or Greece's 295.1 bps.
- For Slovak 2010 treasury bond issuance see ... []
(Reporting by Martin Santa; Editing by Ruth Pitchford)
