* Slovakia sells more-than-expect 1.25 bln euros in debt
* Final price at 80 bps over swaps, tight end of guidance
* Slovaks could tap 2020 bonds via syndication in H1
(Adds final pricing, demand)
By Martin Santa and Jason Hovet
BRATISLAVA, Feb 17 (Reuters) - Slovakia sold 1.25 billion
euro ($1.70 billion) of bonds due in 2016 <SK240216213> in a
syndicated tap on Thursday, pricing the paper at the tight end
of guidance at 80 basis points over mid-swaps.
Tomas Kapusta, head of the debt department at the Debt and
Liquidity Management Agency (ARDAL), said total demand for the
bonds, carrying a 3.5 percent coupon, was 1.9 billion euros.
Slovaks originally planned to sell around 1 billion euros in
the sale of the paper. The higher demand helped tighten prices
after initial guidance was 85 basis points over mid-swaps.
The euro zone country has been resilient to the debt woes of
euro zone peripherals, such as Greece, Ireland and now Portugal,
and with debt levels half the EU average is in a comfortable
refinancing position despite a high public finance deficit.
Kapusta said the sale was a bid to boost liquidity in the
paper and prepare for payment on 3-year bonds maturing in April.
"It was in line with our expectations, in general, we are
satisfied with the prices and the demand," Kapusta told Reuters.
Kapusta said they could eventually tap 2020 bonds
<SK10YT=RR> via a syndication in the first half of the year.
Lead managers on Thursday's issue were Slovak-based banks
CSOB, a unit of KBC <KBC.BR>, Slovenska Sporitelna, a unit of
Erste <ERST.VI>, and VUB, a unit of Intesa SanPaolo <ISP.MI>.
The Slovaks opened the bond in February last year and had
sold 1.178 billion euros worth of the paper in seven auctions to
date before Thursday.
Risk premium sought by investors to hold this paper stood at
136.5 basis points (bps) over corresponding German bunds on
Thursday, compared with Italy's 140.3 bps, Portugal's 441.6 bps
and Spain's 208.5 bps.
"A price at 80 bps is at current market levels and we can
consider it as adequate," said Juraj Valachy, senior analyst at
Tatra Banka.
"The spread has slightly narrowed in the past period. ARDAL
chooses a strategy of a smaller number of bigger emissions and
the current emission helps to prolong the Slovak debt's yield
curve, which is also their goal," he added.
GROSS BORROWING TO EASE
Slovakia's gross borrowing in bonds and treasury bills
should ease to 7.7-8.5 billion euros this year, from 9.5 billion
in 2010, ARDAL told Reuters in December. []
The central European country's debt jumped during the
economic slowdown to 43.8 percent of gross domestic product last
year, from 27.7 percent at the end of 2008.
It is seen peaking in 2012 at 47.0 percent of GDP.
The heavily export-reliant economy returned to growth last
year, driven by foreign demand and a starting recovery in
investment activity, but domestic demand remains weak due to a
stressed labour market and planned lay-offs in public sector.
Slovakia has pledged to deliver on the EU's most ambitious
budget consolidation efforts this year and cut its fiscal gap to
4.9 percent of GDP from 7.8 percent in 2010.
The Debt and Liquidity Management Agency (ARDAL) said had
cancelled a domestic auction of this paper, scheduled for
Monday, Feb. 21.
(Writing by Martin Santa; Editing by Ron Askew)
