Czechs increase size of debut 30-yr benchmark bond

PRAGUE, Nov 29 (Reuters) - The Czech Republic raised the sale of a debut 30-year government bond to 12.3 billion crowns ($579.9 million) on Wednesday as it launched the longest-maturity debt among central European governments.

The notes, bearing an annual coupon of 4.20 percent and maturing December 2036, yielded 4.22 percent on average in the first, competitive round of an auction, which originally offered 8 billion crowns worth of paper.

Demand reached 1.82 times the accepted bids.

Analysts said the bond appeared to be keenly received by foreign investors who may have considered it as cheaply priced versus the equivalent debt issued by euro zone governments.

"This was an ultra successful auction," said Dalimil Vyskovsky, bond trader at Komercni Banka in Prague. "It looks to have been driven by foreign demand for convergence trades."

In lengthening the benchmark local currency yield curve, the Czechs will top regional peers, Poland and Slovakia, which have already raised 20-year debt domestically <PL20YT=RR><SK20YT=RR>.

Previously, the longest-dated Czech bond was issued with 15 year maturity in 2005.

The new bond helps the Czechs step up domestic borrowing to fund a fiscal gap, opting to refrain from foreign borrowing after issuing 30-year, Japanese-yen denominated bonds in January in a private-placement transaction.

The Czech Republic is joining a list of European governments, which have issued bonds with maturities of up to 50 years to cater to rising demand from pension funds seeking to hold sufficiently long-dated assets to cover future payments.

((For TABLE detailing auction results, double click on [ID:nL29121760]))

((Reporting by Marek Petrus; Editing by Ron Askew; Reuters Messaging: rm://marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; Tel: +420 224 190 477)) ($1=21.21 Czech Crown)

Keywords: CZECH BONDS/