UPDATE 1-Czechs eye 50-year domestic bond - FinMin letter

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By Marek Petrus

LONDON, Sept 14 (Reuters) - The Czech Republic is considering issuing a 50-year domestic bond this year to cater to investor demand for ultra-long paper, the Finance Ministry told investors on Friday.

The proposed new paper would carry a fixed coupon and be issued in crowns, the ministry said in a letter to primary dealers and obtained by Reuters from a market participant. Ministry officials had no comment.

"The consideration of this possible issue is based on existing interest and inquiries from investors," said the letter. The ministry wants to launch the bond by mid-November at the latest if it receives positive feedback to its letter.

The offering would lengthen the maturity horizon of Czech bonds, boosting the European Union member country's presence on the far end of the yield curve after its first issue of 30-year note in December 2006.

The Czech Republic would become the fifth European country to have issued 50-year government debt, following France, Greece, Italy and Great Britain. Pension funds tend to be eager buyers of long-dated bonds to match their long-term liabilities.

The letter said the ministry would offer the paper via a special auction with no pre-set limit for the borrowing volume and the coupon payment.

The letter asks investors to respond with details of how many of the bonds they would like to buy and an estimate of the appropriate yield.