RPT-Czechs fail to entice enough buyers for 15-yr debt

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By Marek Petrus

PRAGUE, June 13 (Reuters) - The Czech Republic failed to find buyers for the entire offer of a government bond for the first time in a year on Wednesday as investors shunned the auction of a new 15-year note amidst a bearish global environment.

Weak demand forced the finance ministry to retain 2.78 billion crowns ($129.8 million) worth of paper on its books to top up the 7 billion offering.

It raised 4.2 billion crowns via the two-step inaugural sale of the 4.70 percent note due September 2022 at an average yield of 4.82 percent, a premium of some 6 basis points above a comparable euro zone benchmark .

Czech debt is the most richly priced in central Europe, with local yields trading below or very close to their euro zone equivalents to reflect the difference between domestic policy rates and higher euro zone rates and in anticipation of the adoption of the single currency in the next decade.

The launch of the new long-term bond came against the backdrop of a surge in global debt yields to multi-year highs on investor concerns that global interest rates will have to rise in the face of strong growth and resurgent inflation.

U.S. 10-year Treasury yields , the most widely used bond yield benchmark, climbed to five-year peaks this week.

The first, competitive round of the Czech auction attracted just 4.995 billion crowns worth of bids, well short of the 5.95 billion on offer at that stage.

Demand was much poorer than in last week's auction of the 10-year government bond, when it reached nearly 4 times the sold amount, one of the strongest results ever in a Czech bond sale.

"This is a negative surprise, a total opposite of the surprise result from last week," said Petr Kaspar, debt trader at Ceska Sporitelna in Prague. "The sentiment is bearish."

The auction result augmented a rise in secondary market debt yields , which topped 5 basis points on long-dated notes before falling back slightly in line with global yields.

Last month's first interest rate hike in 8 months by the Czech central bank (CNB) and a weakening in the crown to 9-month lows against the euro have also depressed the domestic bond market in past weeks, sending debt yields to multi-year peaks.

Investors have been betting the CNB may raise credit costs by another quarter-point to a near 5-year high of 3.0 percent as early as July to tame inflation nearing a 3 percent goal and household spending surging at the fastest rate in over 3 years.

TABLES ON AUCTION RESULTS..........[ID:nPRA001347] [nPRA001348]