* Books opened on 15-yr euro bond, pricing expected on Wed
* Terms seen at 150 bps over mid-swaps, low end of guidance
* Latest issue in CEE to take advantage of demand
(Updates pricing, size, demand, adds comment)
By Jason Hovet
BRATISLAVA, Oct 6 (Reuters) - Slovakia prepared to sell 2
billion euros of 15-year euro-denominated benchmark bonds on
Wednesday, with pricing likely to be on the tight end of initial
guidance at 150 basis points over mid-swaps.
The bond adds to a flood of borrowing on international
markets by central European countries over the last month as
lower debt levels and better growth prospects in the region lure
investors seeking higher yields away from more indebted euro
zone periphery states.
Slovak debt agency ARDAL chief Daniel Bytcanek said demand
for the bond topped 4 billion euros, but he declined to confirm
the pricing reported by Thomson Reuters market research group
IFR. Final pricing was expected later in the afternoon.
The funds will help Slovakia finance a yawning budget gap
that is expected to near 8 percent of economic output in 2010
before government-planned savings measures aim to cut it to a
target of 4.9 percent in 2011.
HSBC <HSBA.L>, SG CIB <SOGN.PA>, Raiffeisen's Tatra Bank
<RIBH.VI> and Unicredit Bank Slovakia <CRDI.MI> are managers.
ARDAL told Reuters last week that the offer would be at
least 1 billion euros and the money will be aimed at
pre-financing for next year.
Juraj Kotian, Erste Bank's co-head of macroeconomic and
fixed income research, said a lower offer would have led to a
higher spread over swaps.
"If they had gone for only 1 billion, the price would have
been lower," he said, adding that Slovakia's low debt levels
made the offer more attractive for investors.
Slovakia's public debt-to-GDP ratio is expected to hit
around 44 percent this year, versus a European Union average of
around 80 percent.
Slovakia had sold 6.96 billion euros in bonds and treasury
bills by the end of September. The euro zone member's 2010 gross
borrowing plan is around 9.5 billion euros. []
CEE BENEFITS
Yields on central European debt have dropped since April as
investors, rattled by high debt levels in euro zone members like
Greece, Ireland and Spain, pile into the region. Markets have
also been reassured by the spring elections of austerity-minded
centre-right coalitions in Slovakia and the Czech Republic.
The Czech Republic sold 2 billion euros in Eurobonds due in
2021 at 105 basis points over swaps last month, rounding out
2010 financing needs and pre-financing 2011. []
Local currency bonds have also continued to draw high
demand, with auctions in Poland and the Czech Republic on
Wednesday both attracting much greater demand than the amount of
bonds on offer. [] []
Slovakia sold 1.5 billion euros of 10-year benchmark
Eurobonds in April at 80 basis points over mid-swaps.
A Slovak domestic benchmark bond due in May 2026
<SK16YT=RR> was quoted with a 4.274/101 percent yield by 1200
GMT on Tuesday, down from 4.82 percent seen in April and similar
to yields in Italy <IT15YT=RR>.
A German bund maturing in 2027 <DE113504=> was quoted at
2.737/726 percent.
Slovakia's ruling coalition introduced a 1.75 billion euro
austerity package in September aimed at cutting spending and
boosting budget revenue. On Wednesday, the cabinet approved an
austere 2011 budget draft. []
(Reporting via Prague newsroom; editing by Hugh Lawson)
