* Final price at 150 bps over swaps, low end of guidance
* Latest issue in CEE to take advantage of rising demand
* Will help finance large budget gaps
(Adds final pricing, finmin comment)
By Jason Hovet
BRATISLAVA, Oct 6 (Reuters) - Slovakia sold 2 billion euros
in 15-year government bonds on Wednesday, pricing its second
syndicated issue this year on the low end of guidance at 150
basis points over mid-swaps.
The bond adds to a stream 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.
Debt agency ARDAL chief Daniel Bytcanek said demand for the
4.35 percent coupon bond topped 4 billion euros at midday.
The reoffer yield was 4.373 percent. []
The funds will help Slovakia finance yawning budget gaps
that are expected to near 8 percent of economic output in 2010
and 4.9 percent in 2011.
HSBC <HSBA.L>, SG CIB <SOGN.PA>, Raiffeisen's Tatra Bank
<RIBH.VI> and Unicredit Bank Slovakia <CRDI.MI> managed the
issue. The price was on the low end of initial guidance of 150
to 155 basis points over swaps reported earlier by Thomson
Reuters market research group IFR.
Juraj Kotian, Erste Bank's co-head of macroeconomic and
fixed income research, said the syndicated issue would help
diversify Slovakia's borrowing and take pressure off borrowing
on local markets, keeping demand healthy.
"This is the reason they went for high volume and long
(maturity)," he said, adding the country's relatively low debt
was also attractive for investors.
Slovakia's public debt-to-GDP ratio is expected to hit
around 44 percent this year, up sharply from 27.7 in 2008 but
still far below the European Union average.
Slovakia had sold 6.96 billion euros in bonds and treasury
bills by the end of September.
The country's gross borrowing requirement this year is 9.1
billion euros, up from 6.9 billion euros in 2009, according to a
presentation by ARDAL which accompanied the bond offering.
Borrowing is planned at around 8 billion in 2011.
ARDAL told Reuters last week that the 15-year issue would be
aimed at pre-financing next year.
CEE ATTRACTIVE
Slovakia's ruling coalition introduced a 1.75 billion euro
austerity package in September and approved on Wednesday a tight
2011 budget draft. []
Finance Minister Ivan Miklos, speaking at a press conference
held before final pricing, said 150 basis points over swaps
would be a good result and better than other euro zone members
like Italy or Spain.
"It is confirmation that the budget is realistic," he said.
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, piled into the region. Spring
election victories by austerity-minded centre-right coalitions
in Slovakia and the Czech Republic also assured investors.
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. []
Slovakia sold 1.5 billion euros of 10-year benchmark bonds
in syndicate in April at 80 basis points over mid-swaps.
A Slovak domestically-auctioned benchmark bond due in 2026
<SK16YT=RR> was quoted with a 4.266/093 percent yield on
Wednesday, down from 4.82 percent in April and similar to yields
in Italy <IT15YT=RR>. A German bund maturing in 2027 <DE113504=>
was quoted at 2.722/713 percent.
(Reporting via Prague newsroom; Editing by Hugh Lawson and
Susan Fenton)
