UPDATE 1-Czechs add 30-yr bond auction to Q1 issuance plan

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The Czech Finance Ministry added an auction of the longest dated government debt, the 30-year benchmark bond , to its first quarter debt issuance calendar on Thursday.

The ministry said the auction of the 4.20/36 bond will take place on March 14 and the government will offer 7 billion crowns ($325.7 million) worth of the notes.

The ministry did not give specific reasons for the inclusion of the bond.

But the announcement was in line with the ministry's aim to possibly re-open 30-year bond every quarter following its successful launch in November last year.

Ministry officials have said they would first check investor demand before going ahead with any auctions to avoid being left with unsold paper on the government's books.

The decision to add the auction to the March calendar might suggest the ministry felt comfortable about indications of the expected level of subscription from selected banks.

In the inaugural auction in November last year, demand from both domestic investors and foreign players building exposure to euro zone candidate countries in central Europe reached nearly treble the original 8 billion amount of paper on offer.

The ministry raised the offering and sold 13.07 billion worth of the bonds.

The inaugural tranche auctioned on November 29 gave an average yield of 4.22 percent, on par with euro zone member Greece, which is rated 'A1' by Moody's as well as the Czech Republic.

The bond traded to yield 4.29/25 percent on Thursday, offering an eight basis point premium over the 30-year German Bund .

Analysts expected solid demand for the second tranche if it offers an attractive yield pickup for foreign investors who usually target Czech spreads over the euro zone benchmark.

The ministry also plans to sell 5.3, and 15-year bonds in the rest of the first quarter.

The ministry's 2007 bond issuance plan sets a 152.8 billion crown ceiling at gross domestic borrowing, in case it refrains from a foreign bond issue.

[PRAGUE/Reuters/Finance.cz]