* Bond issuance nears this year's target
* Market not surprised by Dec schedule, waits for next year
* Finmin does not see any foreign issue this year
(Adds ministry comments on target, foreign issues)
By Jason Hovet
PRAGUE, Nov 2 (Reuters) - The Czech Finance Ministry will
hold a single bond auction in December as it nears its borrowing
target this year, although it is expected to ramp up issuance
again next year and put pressure on markets.
The ministry has limited auctions in local currency in the
latter half of the year after earlier heavier issuance to help
meet 2009 borrowing needs that doubled the original plan.
The ministry expects overall bond issuance to reach 260
billion crowns ($14.52 billion) this year, it told Reuters in a
email on Monday.
Gross borrowing including treasury bills would reach 280
billion, in line with estimates from Finance Minister Eduard
Janota earlier this year.
The ministry had said earlier on Monday it would offer 6
billion crowns ($333.9 million) worth of 5.70 percent coupon
bonds due 2024 at a Dec. 2 auction. It already planned to offer
5 billion of a 10-year bond in November.
The ministry added it would auction short-term domestic
treasury bills worth 5 billion crowns in December.
Lower supply has lifted prices on local markets, although
market players say a return to heavier calendars -- such as the
20 billion crowns a month earlier this year -- would add
pressure on yields to start next year.
Markets showed little reaction with yields mostly steady
after inching up in a correction on central European debt in the
past week.
"It is not a major surprise. Until the end of the year it is
already clear supply will be low," a dealer said.
The ministry expects the economy to contract 5.0 percent
this year before a slight recovery next year. It has forecast
the overall public sector fiscal gap to triple this year to 6.6
percent of gross domestic but fall next year to 5.3 percent.
Still bond issuance next year is seen still elevated at 260
billion to 300 billion crowns. []
But analysts expect the target could be met with more
financing channels than in the past, such as it has in the
second half with a Swiss franc issue and euro-denominated issues
on local market.
The ministry also said it would likely start issuing retail
bonds for citizens next year, and could raise up to 20 billion
crowns.
"The latest calendar is without surprises," said Jan Cermak,
an analyst with CSOB bank. "The market is now awaiting the
strategy and calendar for beginning of next year."
The yield on the more liquid 10-year, 5 percent coupon bond
has dropped to 4.23 percent from 5.19 percent since Sept 1.
But it has ticked up from a low of 4.15 percent during a
market correction in the past week as a 4 percent monthly loss
for the crown makes it less likely the central bank will cut
interest rates from a record low of 1.25 percent. []
* For a TABLE with auction details, click on []
(Reporting by Jason Hovet; Editing by Andy Bruce)
