Investors bid low at debut Czech 50-yr bond sale

...growing concerns about investment into riskier assets.

The Finance Ministry sold 4.75 billion crowns ($263 million) worth of the paper in the first, competitive round of bidding on Wedenesday compared with the total of 6.8 billion crowns worth of bonds on offer.

Investor bids reached just 5.455 billion crowns but not all of these were accepted because they were too low. The bond was priced at par, with the average yield of 4.85 percent matching the fixed annual coupon.

"This is nothing too significant, the timing just proved to be bad. Risk aversion is the dominating theme, spurring a flight to quality trades," said Dalimil Vyskovsky, debt trader at bank Komercni Banka in Prague.

"I think foreign players were not keen on raising exposure to Czech assets, and they bid relatively low compared with what could have been expected under normal circumstances," he added.

Growing worries about the health of the U.S. economy prompted global investors to cut risky positions and pour capital into the safe haven of U.S. and euro zone government bonds [GVD/EUR].

A further 1.2 billion crowns worth of paper will be auctioned in the second, non-competitive auction round later on Wednesday.

The offering will 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 has become the fifth European country to have issued 50-year government debt, following France, Greece, Italy and Britain.

Pension funds tend to be eager buyers of long-dated bonds to match their long-term liabilities.

(Details of the government's debt auctions can be found on page )

(Reporting by Marek Petrus; editing by Alan Crosby)

Keywords: CZECH BONDS/

[PRAGUE/Reuters/Finance.cz]