(Repeats story published late on Wednesday)
* Czech 15-yr auction demand strong, yields up
* Polish yield rises at 2-yr, 5-yr auctions
* Markets brace for new supply as auctions pick up
By Jason Hovet
PRAGUE, April 1 (Reuters) - Central Europe's
fiscally-stronger countries Poland and the Czech Republic
stepped up borrowing at auctions on Wednesday, scooping up funds
despite a jump in yields.
A slight pickup in global sentiment has raised investors'
appetite for emerging assets over the past month and auctions
have been well-bid although debt has become costlier.
The Czech Finance Ministry sold a quarter more than offered
of its 4.7 percent coupon bonds due 2022 at a Wednesday auction,
with the average yield rising about 80 basis points from a June
2008 auction, when interest rates were 200 basis points higher.
In Poland demand outweighed supply at auctions of 2-year and
5-year bonds, with yields rising around 50-70 basis points over
previous auctions. []
"As we expected, demand for the short end of the curve was
bigger than for the long end," said Pawel Golebiewski, a fixed
income dealer at BPH bank in Warsaw.
Analysts warned that, while Poland and Czech Republic are
better off than their neighbours, keeping up the pace of
borrowing could be tougher later this year due to economic
uncertainties and a spate of competing issuance from western
European countries selling record debt to combat recession.
"The overall supply of government debt is exploding now, and
within that it will be harder for the Czech Republic or Poland
to attract buyers," said Lars Christensen, senior economist at
Danske Bank.
Central Europe's bond markets are slowly recovering after
the widening global financial crisis hit the region hard last
autumn, and the region's currencies have taken a beating from
growing concerns over growth, financing and banks.
The Czech Republic issued a third more in bonds than planned
in March after going slow to start the year, and on Wednesday
announced plans to offer 21 billion crowns of bonds at three
auctions in May, similar to plans this month. []
LONGER-DATED DOUBTS
Analyst and rating agencies generally view Poland and the
Czech Republic as being better off than neighbours such as
Hungary or Romania, which have both sought aid packages from the
International Monetary Fund and European Union.
Hungary's bond market has stayed under pressure with rising
yields on secondary markets -- accelerated by downgrades from
ratings agencies this week -- and the state has virtually halted
bond issues since October.
The Poles and Czechs have had little trouble in raising
short-term debt, but concerns have started over the willingness
of funds and bank books to buy longer-dated maturities.
"I'm afraid on the long end there will not be such demand,"
said a Czech fund manager. "The new (Czech) calendar (includes)
quite a lot, so I would expect spreads to widen."
The Czech 15-year bond <CZ15YT=RR> on auction on Wednesday
traded with an asset swap spread of 202.7 basis points, down
from 205.4 before the auction but compared with 107 in January.
In the Czechs' case, after an opposition-led no-confidence
vote toppled Prime Minister Mirek Topolanek's government last
week, there could be growing risks to financing costs, said
Finance Minister Miroslav Kalousek.
"When an economic crisis is compounded by the opposition to
include a political crisis, the opposition must realise that
that it complicates problems with financing debt, as well as
maintenance costs," he told Reuters.
(Additonal reporting by Jana Mlcochova and Dagmara
Leszkowicz in Warsaw; Editing by Ruth Pitchford)
