UPDATE 1-Czechs set CZK 165 bln ceiling for '08 local bonds

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The Czech Republic set a ceiling of 165 billion crowns ($9.26 billion) on Monday for medium-term and long-dated local currency government bonds next year, including rollovers of maturing debt. In its 2008 debt financing plan, the Finance Ministry said it would issue bonds worth between 75.1 billion crowns ($4.21 billion) and 165 billion crowns on the domestic market, up slightly from 72.8-152.8 billion crowns scheduled for this year.

Domestic issuance would only rise to the annual ceiling if the country refrains from a public foreign issue as it did in 2006 and 2007. The plan left room to raise up to 89.9 billion crowns worth of foreign debt next year, though the country may choose not to tap foreign markets.

Overall issuance of medium- and long-term bonds in either domestic or foreign markets was seen at 165-185 billion crowns.

In the first quarter of next year, the ministry plans to raise 47 billion crowns through medium-term and long-dated domestic bond issues. It would hold seven auctions, including three to launch a new bond maturing in 2011.

The European Union member country is keeping its options open on returning to international debt markets to possibly curb domestic borrowing. The ministry said a foreign issue would correspondingly lower the needs for local currency bond issues.

The Czech fiscal deficit is seen at 3.4 percent of gross domestic product (GDP) this year and 2.9 percent of GDP in 2008.

The country raised 2.5 billion euros through 10-year and 15-year benchmark Eurobond issues in 2004-2005.

Standard & Poor's rates Czech foreign currency sovereign debt "A" and local currency debt "A+". Moody's rates both foreign and local currency debt "A1".

(For a TABLE with Q1 auction details, click on [ID:nL03498246])

(Reporting by Marek Petrus; editing by Alan Crosby and Tony Austin) ($1=17.82 Czech Crown)

Keywords: CZECH BONDS/

[PRAGUE/Reuters/Finance.cz]