* Poland sells total of PLN 7.2 bln in 2-, 5-yr bonds
* Czechs sell 7.8 bln crowns in 3-yr bonds
* Demand almost triple Czech supply, double in Poland
By Dagmara Leszkowicz
WARSAW, Aug 4 (Reuters) - Investors bid strongly for two
bumper tenders of Polish and Czech debt on Wednesday, although
Poland was forced to accept slightly higher yields than a month
ago while the cost of Prague's borrowing dipped.
Central European government finances have come under closer
scrutiny after Hungary suspended talks with the International
Monetary Fund last month, while worries remain over Romania's
IMF-mandated austerity measures.
Poland and the Czech Republic are seen better placed for
economic recovery this year, and the high volume of bids at the
tenders bode well for governments' efforts to meet record
borrowing needs this year.
Poland sold a total of 4.47 billion zlotys ($1.48 billion)
in two-year bonds maturing in 2012, and 2.73 billion zlotys
($901 million) of five-year bonds maturing in 2015. Demand rose
at the 5-year auction compared to July sale, while total demand
was 14.7 billion zlotys for the two auctions.
The average accepted yield stood at 4.759 percent of the
2-year paper, up from 4.740 percent at the previous tender in
July. It was also some 6 basis points higher at 5.431 percent
for the 5-year paper.
Yields of the Polish benchmark bonds fell some 2 basis
points on secondary markets after the auction.
"The supply was really solid, even for longer dated bonds,
and there were either domestic or foreign investors present at
the auction," said Krzyszof Izdebski, dealer at PKO BP.
"Since it is the only supply in August, I expect prices to
go up further."
The Czechs sold 7.8 billion crowns ($1.41 billion) worth of
the 2.80 percent coupon government bonds due in 2013
<CZ1002729=>, compared to 7 billion crowns on offer. Demand --
which is typically high from local banks for short-dated bonds
-- rose 30 percent from a June auction.
The average yield fell 25 basis points from June and the
yield for the 3-year paper fell some 10 basis points on markets
after the tender, in illiquid trade, to 2.330 percent.
"The demand confirmed expectations that it will be strong,
and the price was even slightly higher than expected," Komercni
Banka dealer Dalimil Vyskovsky said.
"It looks like they are getting somewhat complacent with
their financing; either a eurobond issue is approaching quickly
and/or the budget is developing better than thought before."
RECORD BORROWING
The Czech Finance Ministry expects gross borrowing of 280
billion crowns ($50.68 billion) this year and issued only about
a third of this on the domestic market in the first half.
Officials postponed a eurobond in April due to poor market
conditions and impending May elections that brought a trio of
centre-right, austerity-minded parties to power.
The ministry also said last month it was considering a
eurobond issue in dollars, but details on timing, maturity and
amount were not confirmed. A foreign issue would ease some of
the supply burden on domestic markets.
Poland sees its 2010 borrowing needs at around 197 billion
zlotys ($65.02 billion), but has already met around 70 percent
of it, and some officials have already said the final issuance
would be lower.
Poland has placed a total of 4.25 billion euros bonds, 1.5
billion dollar-denominated papers and 625 million Swiss francs
in bonds on foreign currency markets this year, as well as 58.75
billion zlotys in bonds and 24.4 billion zlotys in treasury
bills on the domestic market.
For details of the Polish and Czech tenders, please click on
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(Additional reporting by Jason Hovet; editing by Patrick
Graham)
